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In CFD trading, you can 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 are solely dependent on the investor’s assessment of future price development.

BUY Orders

The Buy Order states that you want to invest in a rising price.

SELL Orders

The Sell Order states that you want to invest in a falling price.

In addition to these order types, there are two additional conditions, LIMIT and STOP, which will impact the position opening.

1. STOP Orders

A STOP order has nothing in common with the similar sounding Stop-Loss Order. A STOP Order states 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.

2. LIMIT Orders

On the other hand, you have LIMIT Orders, which also have nothing in common with a Take-Profit Order. A LIMIT 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. Your assessment of the underlying market determines what type of order you will want to place.

BUY-LIMIT

The current market price is above your entry price (Order Level).

forex-order-types-1

If you believe that the market will fall to a certain level and then rise again, you should place a BUY-LIMIT order.

BUY-STOP

The current market price is under your entry price (Order Level).

forex-order-types-2

If you believe that the market will continue to rise after it has reached a certain threshold, you should place a BUY-STOP order.

SELL-LIMIT

The current market price is below your entry price (Order Level).

forex-order-types-3

If you believe that the market will rise to a certain level before falling again, you should place a SELL-LIMIT order.

SELL-STOP

The current market price is above your entry price (Order Level).

forex-order-types-4

If you believe that the market will continue to fall after a certain threshold has been reached, you should place a SELL-STOP order.

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