In the Preschool - Type of orders, The examples for the orders they give are very confusing for me. I do understand the Limit Entry Order as shown below.
Limit Entry Order
A limit entry is an order placed to either buy below the market or sell above the market at a certain price.
For example, EUR/USD is currently trading at 1.2050. You want to go short if the price reaches 1.2070. You can either sit in front of your monitor and wait for it to hit 1.2070 (at which point you would click a sell market order), or you can set a sell limit order at 1.2070 (then you could walk away from your computer to attend your ballroom dancing class).
However, under the short-entry order, it shows;
For example, GBP/USD is currently trading at 1.5050 and is heading upward. You believe that price will continue in this direction if it hits 1.5060. You can do one of the following to play this belief: sit in front of your computer and buy at market when it hits 1.5060 OR set a stop-entry order at 1.5060. You use stop-entry orders when you feel that price will move in one direction!
Why would you wait the price to hit 1.5060 to buy it instead of buying at 1.5050 which is cheaper? The examples of stop-loss order and trailing stop order are also similar to the short-entry order. Hence, i am very confused about this
Limit orders are typically used if you are trading retracements, you buy lower and sell higher. Stop orders are used for breakout trades. In that example price is currently at 1.5050, IF it hits 1.5060, you expect price to continue higher so you place a buy stop at 1.5060 in hopes that when it reaches the stop, it will continue higher. In this example, 1.5050 could be the top of the range and 1.5060 would be a solid break above which may lead you to conclude that price will go higher.
Buy limit is used if you want to buy a currency at a set price away from where it is now so you don’t have to sit in front of your trading terminal. Buy stop is used for hedging strategies. For example you have a short positions and now want to hedge it with a long positions without closing your short so you have both open at the same time.