Knowing the different order types is what separates a trader with a plan from one who just clicks buy and hopes. Orders let you enter at the right price, lock in profits and cap losses — automatically. This guide explains every forex order type in plain English, with when to use each.
The two ways to enter a trade
1. Market order
A market order opens a trade immediately at the current price. Use it when you want in (or out) right now and a few pips do not matter. This is the most common order for beginners.
2. Pending orders (enter later, at your price)
A pending order tells the platform to open a trade only when price reaches a level you choose. There are four types:
- Buy Limit: buy below the current price (you expect a dip, then a bounce up).
- Sell Limit: sell above the current price (you expect a rise, then a drop).
- Buy Stop: buy above the current price (you expect a breakout higher).
- Sell Stop: sell below the current price (you expect a breakdown lower).
Pending orders are great when you have a plan but cannot watch the screen all day.
The two orders that protect every trade
Stop-loss (SL)
A stop-loss automatically closes your trade at a set price if the market moves against you — capping your loss. Every trade should have one. It is your single most important risk-management tool.
Take-profit (TP)
A take-profit automatically closes your trade once it reaches your profit target, so you lock in gains without having to watch constantly.
Putting it together: a worked example
Say EUR/USD is at 1.0800 and you expect a rise:
- You place a market order to buy at 1.0800.
- You set a stop-loss at 1.0780 (20 pips of risk).
- You set a take-profit at 1.0840 (40 pips of reward).
That is a 1:2 risk-to-reward trade that manages itself — whether it wins or loses, your plan is already in place.
Risk warning: Orders help manage risk but do not remove it. In fast markets, prices can gap past a stop-loss. Trading carries a high level of risk and you could lose your invested capital.
Frequently asked questions
What is the difference between a limit and a stop order?
A limit order buys lower or sells higher than the current price (trading a reversal); a stop order buys higher or sells lower (trading a breakout).
Should I always use a stop-loss?
Yes. A stop-loss caps your downside and is the foundation of risk management on every trade.
What is a good risk-to-reward ratio?
Many traders aim for at least 1:2 — risking 20 pips to make 40 — so winners outweigh losers over time.
Can I change my stop-loss and take-profit after opening a trade?
Yes, you can adjust them while the trade is open — but avoid moving your stop further away just to avoid a loss.
Trade with a plan
Open a free demo and practise market and pending orders with stop-loss and take-profit. New here? Start with our beginners guide and learn to read charts.