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Market order:
This is the most basic order that we find when trading in which we indicate to the broker our intention to enter or exit the market or in other words to open or close our position. At the time and current price that exists in the market at the time the offer is launched. Accordingly, the order is executed immediately at the ASK price (bid price) and if it is a sell order, the BID price (ask price) is applied. This type of order is characterized by being used quickly in scalping or day trading.
Limit orders:
They are those where the trader has the possibility to enter and exit the market at the time of launching the order where he has the possibility to set a specific price for the order to be carried out when it reaches the set price. These limit orders or pending orders are active orders because they are active but are executed when the asset reaches the fixed price. Within this classification there are different types:
Buy Limit order: serves to take a long position at a given price or lower. These are very useful when the price of the asset is expected to go down, usually a rebound is expected to settle at a support and then go up again.
Buy stop order: This is a buy order that is characterized by having a price lower than the current price in the market. It is executed when it is believed that the price of the asset will continue to fall.
Sell limit: An order to sell at a price below the current market price. It is generally used when prices have a correction and a rise occurs and then fall.
OCO orders: One cancels-other orders are orders that serve to cancel others. In this case, two orders are issued in the market and when one is activated, the other is cancelled, so as not to have to do it manually. In this type there are two categories:
OCO breakout order: in this two stop type orders are created, one where you buy at a level above the current price and another to sell below the current price.
OCO reversal order: Here we will generate two limit orders, one to buy at a level below and one to buy at a level above the current price.
Stop Loss:
In this type of order the price of the asset is modified and updated according to the evolution of the order we have in the market. This order is characterized because it allows us to choose the amount of loss that we are willing to assume. The Stop Loss order acts as a kind of insurance protection against large losses caused by market volatility.
Take Profit:
It is an order that closes the operation when we have already obtained the expected profits in the price that has been previously marked. It acts as a risk management tool with which profits are obtained at the specific market prices established in the order.
To determine the type of order to use in the trader we must first carry out a study of the market and the corresponding technical analysis, always remembering that we should not rely on the use of a single strategy or indicator to determine the future of our investment.
The knowledge of the types of orders gives us the possibility to create an order according to the usefulness and even the level of experience we have in the study of the market of a certain asset. In this case, there are orders that give us more security and comfort in our investment projects and others that can be considered real risks when they represent the all or nothing in profits.
