Forex order types explained for beginners

Every trade starts with an order, and choosing the wrong type can mean a worse price, a missed entry or a stop that fills far from where you expected. This guide explains the main forex order types, market, limit, stop and stop limit, plus stop loss, target and trailing orders, with clear examples and a comparison table.

Market orders

A market order buys or sells immediately at the best price available. A buy fills at the ask price and a sell fills at the bid price, so you always pay the spread when you open a position.

Market orders are the simplest choice when getting into the trade now matters more than the exact price. The trade off is that you do not control the fill. In fast markets, such as the first seconds after a major data release, the price you receive can differ from the price you saw. That difference is called slippage.

Pending orders: limit and stop

A pending order waits until the market reaches a price you choose. There are two basic families, and the difference is where your price sits relative to the current market.

Limit orders ask for a better price than the market offers now. A buy limit sits below the current price, and a sell limit sits above it. Traders use them to buy a dip or sell a rally at a level they have planned in advance. A limit order fills only at your price or better, but it may never fill at all.

Stop orders trigger when the price moves through your level in the direction you expect to continue. A buy stop sits above the current price, and a sell stop sits below it. Traders use them to enter on a break of a level. Once triggered, a stop order becomes a market order, so it can fill with slippage.

Order	Where it sits	Typical use	Fill
Buy limit	Below current price	Buy a pullback to a level	Your price or better
Sell limit	Above current price	Sell a rally to a level	Your price or better
Buy stop	Above current price	Buy a break higher	Market price once triggered
Sell stop	Below current price	Sell a break lower	Market price once triggered

Stop limit orders

A stop limit order combines the two. When the stop price is reached, the platform places a limit order instead of a market order. This caps how far from your level you can be filled, but if the market jumps past your limit, the order may not fill. Not every forex platform offers stop limit orders, so check what yours supports.

Orders that close a trade

The same mechanics are used to exit positions, and most platforms let you attach exits when you open the trade.

Stop loss. A stop order that closes your position if the price moves against you to a set level. It limits the loss on a normal day, but it is not a fixed price promise. If the market gaps over your level, for example over a weekend or on major news, the stop fills at the next available price, which can be worse. Some brokers offer a premium stop that always fills at your level, for a fee; check the terms.

Target order. A limit order that closes your position when the price reaches a level in your favour. Many platforms label it TP. Because it is a limit order, it fills at your price or better.

Trailing stop. A stop loss that follows the price by a set distance as the trade moves in your favour, and stays put when the price moves back. On many platforms it runs on the platform itself, so it may only work while your terminal is open; check how yours handles it.

How long an order stays active

Pending orders also have an expiry. Good till cancelled orders stay active until you remove them. Day orders expire at the end of the trading day. Some platforms let you set a specific date and time. Forgotten pending orders are a common source of unwanted trades, so review open orders before big events and before the weekend.

A worked example

EUR/USD trades at 1.1000. You want to buy only if it breaks above 1.1050, with a stop at 1.1010 and a target at 1.1130.

• Place a buy stop at 1.1050.
• Attach a stop loss at 1.1010, a 40 pip risk.
• Attach a target order at 1.1130, 80 pips away, for a risk to reward of 1:2.

Size the position from the 40 pip stop and the money you are willing to risk, not from the margin available. The risk to reward calculator and the lot size calculator handle the arithmetic, and our guide to pips explains the units.

Order checklist

• I know whether I need a limit order or a stop order for the trade I have in mind.
• I attach a stop loss when I open the trade.
• I expect possible slippage on market and stop orders around news.
• I check the expiry of every pending order.
• I review open orders before the weekend.

Frequently asked questions

What is the difference between a limit order and a stop order?

A limit order waits for a better price than the current market and fills at that price or better. A stop order triggers when the price breaks through a level and then fills at the market price.

Does a stop loss always fill at my price?

No. In normal conditions it usually fills close to your level, but if the market gaps over it, for example after a weekend or major news, it fills at the next available price.

Can I change a pending order after placing it?

Yes. On most platforms you can move or cancel a pending order at any time before it is triggered.

Related: slippage, gaps and weekend risk explains why a stop loss is not always filled at your price.

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