What are the characteristics of an order in Forex? For a person to start investing in Forex or any other financial market, the basic concepts and, more importantly, the order to buy and sell must be clear. Once you have these concepts clear, you can start with the study of fundamental technical analysis, start practicing operational methods, etc. But if from the beginning you do not know the basic concepts of a contract, you will have heavy losses not because of the operation, but because of the lack of basic knowledge.
Characteristics of an order in Forex
- The currency pair: when investing, we must be very attentive to the currency pair that we are about to negotiate, whether for sale or purchase. We must also be clear, how to read the example of currency pairs: GBP, JPY, EUR, CHF, etc.
- Instant execution : This is a type of order that is used to open instantly as the word itself says. It is used to invest when we see a change in trend, a confirmation by technical analysis or simply enter the volatility of a fundamental news.
- Pending order : this type of order is used when we want to invest at a buy or sell price different from the current price. It is used when we don’t have time to be in front of the PC. There are two types of pending orders, ( Buy Limit, Buy Stop, Sell Limit and Sell Stop ).
- Volume : It is the lot that we are going to invest and that will depend on the leverage of 1: 100, 1: 200, 1: 300 or the one we contracted with Broker a . The volume of an operation can be micro-lot, mini-lot and lot and the trader or investor can fraction the volume, that is, make an operation with the combination of micro, mini and lot for example invest with a volume of, 0, 36, 1.15, 0.60, 0.13… etc.
- Contract value: The contract is related to the volume, that is, the value of a volume of a lot (1) is 100,000 units, the value of the contract of a volume of a mini lot is 10,000 units and the value of the contract volume of a micro-batch is 1,000 units and just as the volume can be fractionated.
- Margin : is the amount of capital that the brokerage will «block» so you can open different operating volumes and that capital kept depends on the leverage that have contracted with the broker, it is important to note that if you do not like at least the margin cannot open the volume above the margin .
- Spread : It is the difference in the purchase price less the sale price, and this will cause the commission that the broker will charge each time you open a transaction for sale or purchase. This Spread can be fixed or floating, but it will also depend on the package contracted with the broker.
- PIP Value : Percentage point, is the decimal value that all currency pairs have when they increase or decrease their value in the market, and this will add money if we enter profits or lose money if we lose our operation. Usually the pip of a currency pair is in the fourth or third digit after the point, but this can vary according to the currency pair.
- Daily swap : it is a charge or payment by the Broker to maintain an open position to buy or sell in any currency pair and this will mainly depend on the interest rate that is maintained in each country according to the currency. and subsequently, it will depend on buying or selling on any pair.
- Sale : It is the operation of selling the base currency in exchange for a number of units of the quoted currency, this operation is performed when the graph of the currency pair starts to decrease and obtain minimum values.
- Buy : It is the operation of buying the base currency in exchange for a number of units of the quoted currency, this operation is performed when the graph of the currency pair starts to increase and obtain maximum values
- Stop Loss : The value we set to close if our operation does not go well and when defining the SL it closes automatically.
- Take Profit : The target value that automatically closes the transaction when it arrives.
- Trailing Stop: Causes the stop loss to be adjusted according to the positive movement of our position.
Although it is still necessary to delve into some of the 14 concepts explained, it is the least that a person who is going to start investing in the Forex market should know.