What Are Limit Orders In Forex Market

                                                                   

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There are two types of conditional orders in both forex market and stock market - Stop Loss Order & Limit Order. They are called conditional orders because they never come into effect unless and until specific conditions are attained. 

Stop loss order is a very common and popular term in market and all traders are aware of it and use it daily. In this type of order, a trader instructs his broker "if the price goes up or down against as planned, beyond a certain level" the trade must be closed to avoid huge loss. 

Whereas, in a limit order the trader or investor instructs the broker to open or close a trade at a preset price or better. With a limit order, a trader wants to book profit when he/she has gained reasonable profit and doesn't want to take further risk for more. 

The limit price is the price at which a trader wants a limit order to be executed. A buy limit order instructs the broker to execute the order at the limit price or lower. While a sale limit order is executed at the limit price or higher. 

Many a traders are reluctant to place a limit order in the sense that it deprives a trader of more earnings when the market is in favor as planned. 

But it must be kept in mind that any market whether stock or forex are always volatile and fluctuating and a sudden unexpected reverse trend could eliminate the entire gain already made, in minutes. It's very difficult to predict, just when the price has reached its maximum limit and one must close the trade and book profit.

Therefore, a sensible limit order can always save a trader from disaster and protects the trader against unforeseen contingencies. 

A trader can check through the price movement of a specific currency pair, in the forex market for previous months and years to figure out a perfect limit order.

At the same time, one must exercise caution, in the sense that previous movements are not always going to be same in future. 

A limit order can make a trader stress free. Once a perfect stop loss and limit order is placed, a trader can leave the computer and can concentrate on other obligations of the day. The investor doesn't remain engaged to the market to watch every price movement. 

This protects the investor against deviation from the original strategy leading to less tension and panic in the forex market.