“Orders” in foreign exchange (forex or FX) are specific instructions given to carry out a trade, while the method by which these orders are carried out is known as the “execution mode.” For obvious reasons, most traders prioritize finding a platform that supports all trading orders and execution modes. This is mainly to accommodate their varying trading strategies and try out as many alternatives as possible to increase their odds of profitability.
To this effect, we’ve curated an article on the top platform for traders with all order and execution modes available to perfect your trading strategy.
Order Types in MetaTrader 5
MetaTrader 5 is labeled a top trading platform for various reasons, and one of these is its support for all types of trading orders in the market, including market, pending orders, and trailing stops.
Traders use market orders to carry out instant executions. The instruction is given to the brokerage company, and the order is carried out upon confirmation. Market orders work by buying or selling an asset at the current price and carrying out the execution in real time. This order method comes in handy when a particular investment is witnessing high demand and multiple traders are willing to purchase. With market orders, purchases or sales can be made almost instantaneously at a price close to the asset’s current price.
On the flip side, a pending order can be customized to execute based on predefined terms attached to such a purchase. The order here is also presented instantly, but at a condition where it should only be executed at a specific price or time in the future. MetaTrader 5 has six pending order types that can be used in different scenarios depending on a trader’s strategy. These subtypes include buy limit, sell limit, buy stop, sell stop, buy stop limit, and sell stop limit.
A buy-stop order is initiated to buy an asset once it reaches a speculated price higher than its current price. Traders use this method to benefit from potential upward price trends. For this to work, the buy price must be above its current price.
The sell-stop order is the direct opposite of buy-stop orders. The instruction here is to sell an asset once it reaches a speculated price lower than its present price. Likewise, for buy stop, this works when the sell price is below the market price.
This is an order to buy an asset below its current price, hoping for a price increase after the purchase. In other words, you buy an asset once it reaches a price lower than its current one, then sell it higher for profit.
A sell limit is an order that involves selling an asset at a price above the current market rate. It is a request order to execute a trade at a price higher and better than the current rate.
Buy Stop Limit and Sell Stop Limit
The buy-stop limit is a combination of buy-stop and limit orders, while the sell-stop limit is a combination of sell-stop and sell-limit orders.
Execution Modes in MetaTrader 5
Seasoned traders are already familiar with the two types of execution modes available for traders in MT5, but to beginners, this might be news. The MT5 trading platform offers instant execution orders and market execution orders to traders, and below, we’ll discuss what these two would mean in your everyday trade.
For instant execution, the broker will execute your order using the latest market rate, with an opportunity to requote in cases of price changes. This means that with every change in price rate, the broker sends in a requote where you get to see the new price and can then decide whether or not to work with it. The apparent advantage of this is that you could agree to price deviations. On the flip side, the disadvantage is that it can be a much slower process, and traders sometimes lose opportunities for rare breakouts in the back-and-forth process of sending requotes.
Market execution is a much faster mode of execution because it doesn’t require requotes. The order is executed at the broker’s current price, even if there are variations from this and the current market rate. The shortcoming of this method is that deviation in prices can be unexpectedly higher than usual, causing losses on the trader’s part.
Simplify Your Processes With MT5
The aim is to understand how these order systems and execution modes work and how they could help perfect your trading strategy. In terms of execution, getting requotes could adversely affect your trade. Likewise, a huge slippage could also be an issue. The ideal approach is to know when to apply each of them. The same goes for order systems. There is no such perfect approach in trading since every option comes with its shortcomings. Access your goals and decide which strategy is the closest to achieving those goals.