“Trading Operations“
> Explanatory Article by Marios Kyriakou, MSc Economics
About the author: Marios Kyriakou has a bachelor’s degree in Economics from the University of Cyprus and a master’s degree in Economics from the University of Warwick. He is also a holder of CySEC’s Advanced Certificate in Financial Services Legal Framework and a professional in Online Trading, Forex and CFDs with more than 7 years of experience.
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<Last updated 16.04.2020>
Dear reader,
Hi! If you are interested in Forex please read carefully the below article that shows how trading is performed using a trading platform.
Opening a Position
To open a position of any kind in the market, you need to place an order. An order has all the relevant information about the position, like the position size, entry price, exit price, execution type, and other.
In Forex/CFD trading, you are able to decide whether you go directly into the market, immediately open a position, or if you want to open a position only after certain price conditions are met. An order to open a position can have four different variants, each of which is solely dependent on the investor’s assessment of future price development.
Opening of a position, or entering the market, is the first buying or selling of a certain amount of the security traded. A Position can be opened either by execution of a market order or by the automatic triggering of a pending order.
Market Orders
A market order is executed immediately when placed. These are instant requests/orders, which means that you are buying or selling instantly at the current price.
A market order immediately becomes an open position and subject to fluctuations in the market.
This means that should the price move against you, the value of your position deteriorates and you incur a loss; of course, it is important to remember that this is an unrealized loss until the order is closed. If the price in the meanwhile rebounds then your loss turns into profit.
New Order — open the “New Order” window where one can prepare and place a market or a pending order for the symbol selected.
> one can specify the Stop Loss and Take Profit levels on preparation.
By choosing the lot size and clicking BUY or SELL button you immediately send a market order from your account. This order is sent to the server of the Broker that offers you the brokerage service.
Stop Loss and Take Profit – Due Orders
Stop-Loss. This protects you from higher losses, as it automatically closes your position at the next available market price when it reaches the Stop Level. In essence, a SL acts as insurance against losing too much.
Take-Profit – secure profits. Following the same principle as a Stop-Loss level, you can also automatically book profits. A Take-Profit level can protect you from having a profitable trade change into a less profitable one or even a losing trade.
Pending Orders
New Order — open the “New Order” window where one can prepare and place a market or a pending order for the symbol selected.
At the order preparation, one can specify the Stop Loss and Take Profit levels. Zero values of Stop Loss/Take Profit orders mean that these orders have not been placed at all.
Pending Types:
– Buy Stop order –Buy limit
– Sell Stop order –Sell Limit
Stop Orders
A STOP order has nothing in common with the similar-sounding Stop-Loss Order. Stop orders become market orders only once certain conditions are fulfilled.
You can use stop orders to buy above the market, or sell below the market. A STOP Order essentially implies that you expect the existing trend of the price to continue after it reaches your order price. With a STOP Order, you believe that once a threshold has been reached, the trend will continue.
Limit Orders
LIMIT Order can only become active once certain conditions are met. A similarity with market orders is that limit orders can also be both buy limit orders and sell limit orders. A LIMIT Order states, that when your order price is achieved there will be a reversal in the current trend.
With a LIMIT Order, you believe that once a price reaches a certain threshold, there will be a reversal in the trend. Generally, if you’d like to buy below the current market price, or sell above the current market price, a limit order would be the type of order to use.
Position Close
If a position is open there is an option to close it. This means that an instant request/order will be sent to the server to close the position. The Client Terminal allows also closing positions partially. To do so, one has to specify the number of lots less than that given for the opened position.
A pending order can only be canceled/deleted.
Modifying Open Positions
Modifying the current position consists setting of new levels of Stop Loss or Take Profit attached to it.
To modify a position, one has to execute the “Modify or Delete Order“. To change the Stop Loss or Take Profit values, one has to enter the new values in the corresponding fields.
Modifying Pending Orders
One has to execute the pending order context menu command of “Modify or Delete Order” or double-click with the left mouse button on the pending order status bar in the “Terminal — Trade” window.
Some Brokers have a restriction rule for the modified price which is a minimum distance that the modified level can be placed from the current market price.
Trading with Expert Advisors/Robots
The development environment (MT4 programming) allows creating, debugging, and testing expert advisers.
Experts are able not to only alert about recommending trading signals, but undertake complete control over trading activities online.
MetaQuotes Language 4, MetaEditor, and strategy testing tools are built in the terminal.
Auto Trading: To work at financial markets more effectively, one can develop his/her own successful system of trading.
One can create the following using these means:
>Expert Advisors — mechanical trading systems that allow complete automation of analytical and trading activities;
>Custom Indicators — independently written technical indicators intended for analyzing of price changes;
>Scripts — programs to be executed only once, on request.
These are some of the basic trading operations. There are many more options and features. The purpose of this is to make you get familiar at least with the basics and the options possible through trading platforms. Seek to learn all of them if you are interested.
The development environment (MT4 programming) allows creating, debugging, and testing expert advisers. Experts are able not only alert about recommendation trading signals, but undertake the complete control over trading activities online.
(Auto Trading – MUST BE ENABLED)
MetaQuotes Language 4, MetaEditor and strategy testing tools are built in the terminal.
One can create the following using these means:
- Expert Advisors — mechanical trading systems that allow complete automation of analytical
and trading activities;
- Custom Indicators — independently written technical indicators intended for analysing of
price changes;
- Scripts — programs to be executed only once, on request.
These are some of the basic trading operations. There are much more options and features.
The purpose of this article is to make you get familiar at least with the basics and the options possible through trading platforms.
Seek to learn all of them if you are interested by contacting us.
“I hope I am clear on this one. If not, contact us on social media and we will do our best to help you.
Thank you for reading my articles and watching my videos.”
Marios Kyriakou