I’m a new trader and new to babypips forum. Hopefully I’m entering my question in the proper place on this site.
I was advised to use limit orders, not market orders to enter a trade. I have also read on the internet about using stop orders to enter a trade.
Could someone please clarify how a stop order is used to enter a trade and how entering a trade on a stop order differs from entering a trade on a limit order. And all things considered, would you suggest someone use a limit order or a stop order to enter a forex trade?
A stop entry takes you into the trade in the direction it is going. A limit takes you in from the other direction. Say I want to go long at 2500 and we are at 2490. I would enter a stop buy at 2500. If we were already at 2510 I would need to enter a limit order to buy at 2500 and would be taken in only when it comes down to my price. The situation is only complicated because platforms use these terms differently and it can be confused if you have the opportunity of entering a stop limit order which basically means you will allow some slippage on the way in and you can define how much. The advantage over market orders is that the broker can fill you at any price with a market order (never in your favour) and the slippage can be huge in a fast moving market say at a news release time
It’s good to see a new trader like you asking questions, but have you gone through the free Babypips school yet? It’s gives you a good overview of the Forex market, as well as info on order types, etc.
