Various types of trade orders can be placed on trading exchanges for different financial assets such as futures contracts and stocks as well. So, before you start to buy a stock and sell it, you will have to know the different types of orders. In the share market, the order represents the instruction given by the issuers of the order. This particular order or instruction is given to the dealer or broker in order to buy, sell, deliver, and receive the commodities or securities as a part of their commitment.

Order level trading is a way of trading where trader creates positions based on important price levels which are significant to his analysis. Using Fib. levels or past low or high price levels (daily low, daily high, weekly low, weekly high, etc.) or indicators trader creates pending trades or live trades, puts projected stop loss and target.

But you may confuse which type of ORDER LEVEL TRADING is best for trading. Here is a full guide about that and you will also get to know which type of order you should use on which trade.

WHAT IS THE ORDER?

If you want to start a trade or close it, then you should know the fact that order is simply an instruction. You can easily give the order to your particular provider. In this way, they can do the trading on behalf of yours. You can save your time and you can reduce your loss and get profit as well.

The order level is particularly referred to as the price or cost through which you want to make entry and exit in the share market. This will also enable you to set a point on which you want to make the buying or selling decision.

TYPES OF ORDER:

There are so many types of orders. These are such as follows:

1. MARKET ORDER:

In this order, you need to buy or sell the stock at the available price. This particular type of order will be implemented or effected immediately. But the price at which the market will be affected is not guaranteed. It is one of the simple types of trade orders. In this order type, the trader or investor does not have any such control over the price. This particular order type is very much popular among individual investors. They can buy or sell the stock without having any delay.

2. LIMIT ORDER:

On the other hand, the limit order is a type of order where you can limit the price or the cost at which you are willing to buy or sell the stock. This type of order guarantees a price.

3. STOP-LOSS ORDER:

It is one of the most important types of orders. In this order, the trader can limit the losses by exiting the trade after reaching the specific price. By placing this particular type of order, you can reduce the number of losses and chances of high losses as well. While the stop cost is reached then the stop order will become the market order.

YOU SHOULD KNOW BEFORE PLACING STOP OR LIMIT ORDER:

Before placing your order, you need to know some important factors. These are such as follows:

1. ORDER TIME:

Order time is considered as the length of duration. Your order will be open until or unless it expires and finishes. You can get a chance to choose the expiry date and time when you want to exit from the market. Here are two different types of order time or duration such as GTD and GTC. In GTD, you need to choose the date and time when you want it to be canceled. On the other hand, in GTC, your order is active until you cancel it.

2. GAP AND SLIP:

You should know the fact that the market has gaps and you may jump from one market price to another price without any such market activities. This can happen if you open a trade overnight or at the time of the weekend. In this case, you can close the trade with the best price available. But you may take the risk of losing money. This is known as slippage.

PLACING A STOP ORDER:

The traders place the stop order in order to limit the risk or protect their profits in the trading position. Traders use to place this type of order while they initiate the trades. here are some key factors that you need to know:

* This particular order is designed to reduce the number of losses of the investor in the trading market.
* This order effectively triggers the market order at the time of buying or selling.
* The main benefit is that you do not need to observe the stock performance daily.

PLACING A LIMIT ORDER:

You can do it in the same way just like the stop order. This order is used for buying and selling the transaction. This type of order sets a limit on the price that the investors are willing to pay for the stock. Buyers can use this type of order in order to protect themselves from sudden changes or hikes in stock cost. Your broker may ask you some specific things if you want to invest in a trade with the help of a limit order. These are such as follows:

• Type of the transaction either it is buying or selling.
• Your number of shares.
• Any kind of security you have bought or sold.
• Type of the order.
• Price.

Now, you have known all the details about the trades and different types of orders as well. The type of order can be influenced by the investment approach of yours. If you want to go with the long-term investment policy, then you can go with the market order type. It is one of the cheapest order types. You can save your time and money by using the orders perfectly. By correctly using the order types, you can also save your efforts. Through this, you can maximize the chances of profits and reduce the amounts of losses as well. If you are not sure and feel confident, then you can take help from the experienced traders and get their advice as well. In the volatile market, you need to make the right investment decision to make a profit and decrease the losses as well.

Trading cannot always be profitable. No financial markets, including the forex market, are sure shot accurately. But as they say, try and try and you will win. Here winning means being a little more accurate forex trader than already are.

Accurate forex trader implies the possibility of a trader to have as high as it is the possible trading ratio as the number of correct predictions to the total number of input trades when the risk-reward relationship is immutable. Humans tend to find solutions to their problems, and that has been true in the case of forex trading. With the best practices, a forex trader can increase the chances of profit and reduce the chances of losses. These tactics are as simple as being aware, disciplined, and prepared for the forex market. Implementing constant awareness in trading can, for sure, lead to better accuracy forex trading. Traders need to learn to analyze mistakes if they want to improve accuracy.

How forex trader can improve accuracy?

For example, trader creates a strategy where he can buy and sell some forex pair using some rules. Trader risks $10 and tries to reach $10 target. When the trader tested strategy his winning ratio was 49% for an example (risk: reward is 1:1). Then using a trading history plan or some machine learning algorithm, a trader can create a better model, change rules, add an additional rule. Just one filter (new trading rule for example to buy only above EMA200 or SMA10, or etc.) can improve accuracy and now it is 52%. This is huge improvement and now strategy can be profitable.

Tips How to Become an Accurate Forex Trader:

1. Take It Easy

Things, even in ordinary life, get ruined if you take impulsive decisions. The same thing applies to forex trading. Be easy when trading in forex.

The forex market is highly leveraged as much as the typical leverage scenario looks like 50:1 or 100:1. It means if you have $1 in your forex trading account (it is just a hypothetical example), you will get to trade forex worth $100. That is insane, right? In some cases, the leverage is as much as 200:1. The profit using leverage is gigantic, but it also comes with the downside risk of being wiped out from the forex market within seconds if the trade goes in the opposite direction.

Forex trading is different from stock market trading. In forex trading after getting done with the questionnaire on trading goals, if you have a debit card and an identification card, you can have margin trading unlike the stock market as in the stock market, you need to have real money in your trading account. Thus, it’s easier for more people to trade in the forex market.

Easy access often makes novice traders enter the market with the hope that they would make easy and quick money. The attraction here can be compared to a lottery ticket that people buy as their financial remedies. Most of the lottery buyers feel that they are going to win the lottery and get rich in a few days. But what they forget is the fact that only one in a hundred million has the odd chance to win the lottery.

The same thing happens when new traders enter the market. They forget that the forex market is not a lottery; it would require more than just a chance. There has to be enough knowledge, skills, and patience to win profitable trades, and that doesn’t come by just gambling.

Thus, the best practice you can opt for while starting the forex trading is to go in easy. You must have a limit on how much you should trade initially. In addition to that, never trade without a stop loss. Stick to what is your reward to risk ratio and how much you can afford to lose in a day. If you abide by your own rules and apply your skills, eventually, you would earn well. But never trade as if you are gambling – this is the bottom line for being an accurate forex trader.

2. Be Prepared for Your Trade

One has to be prepared in life for the endeavors that he/she is aiming for. So, to be an accurate forex trader, you are advised to be fully prepared before you begin trading. No one wants to be an average trader, right? In forex, average trading means being one of the 2/3 forex traders who lose money. Many times forex traders even lose their capital money, which results in high debts. Also, average forex traders tend to give up trading within four months. No one wants either of these, correct?

The best way you can avoid these consequences is to make yourself educated with forex trading and try trading on a practice forex account.

You have to read as much as you can and keep yourself updated with the current news and learn the technicalities of the forex market. You can do these by reading financial newspapers, watching educational videos, or going through research papers. You may have to invest time, but that would be the best trade you would take in your life.

As stated above, you can also start to learn trading through a practice forex trading account. Most of the U.S. forex brokerage houses provide these accounts without charging fees. So, make the most of it. Take a pen and paper and make a note of your trades and your mistakes. Trade journaling is useful. It will help you keep track of your trading directions. Your initial trades would not be profitable, but that’s totally fine, as that is how it is supposed to be when you are learning. And that’s the reason that you should do it on a practice account, so you do not lose real money.

3. Be a Disciplined Trader

The foremost thing to be an accurate forex trader is to be disciplined. You must decide your losing capacity, place stop loss according, and do not deviate from it at any cost. Also, do all these things before you start your trade. Even if you think you can gain more profit, don’t trade as greed is a poisonous thing, and you may end up losing more than what you have won till now. Stick to your trading plan, as without a trading plan, trading is just mere gambling. You can’t expect to win if you can’t follow your own rules.

Don’t Fall for Scam Traps

This doesn’t seem that major of standard practice, but it is very crucial. In greed, we tend to do things we won’t do otherwise. There are people out there to take advantage of your greed by selling you “guaranteed results” and “get your money doubled” kind of schemes.

Thus, choose only a credible broker; cheap can actually cost you a lot more in the case of forex trading. You can also check the credibility or the status of a broker from the National Futures Association (NFA) in the case of the United States. If your potential broker is not in the record list, it is a big red flag. Remember, in the end, as much as you educate yourself and as much time you invest in forex trading, the more accurate forex trader you will become with the passing time.

It is easy for any individual to enter the foreign exchange market as it has low barriers to entry. All it requires is as low as a computer, good internet connection, a broking account, and a few hundred dollars.

Though low barriers to entry don’t mean that the profitable trades too would be easy, there are many common forex mistakes that a trader needs to avoid. Some of these forex mistakes are as simple as trading without a stop loss or keep on adding to a losing trade. Forex mistakes that traders should avoid in day trading are blind following of mechanical systems, testing systems only a couple of years in the past instead of several decades, huge risk-taking, overtrading.

Thus, it is advisable for you to consider all the scenarios before you start trading. Below we have listed the top 10 reasons why forex trading goes wrong!

1. Do Not Trade If You Keep on Losing

The two main things to keep an eye on in trading is the winning rate and the risk to reward ratio.

The winning rate is the number of trades that you have won stated in a percentage. For example, if you have taken 100 trades in total and if out of the 70 have proved winning, then the winning rate is 70 percent.

On the other hand, the reward to risk ratio is how much reward you get in terms of the risk you take. It also means how much you lose on an average. If you are losing on an average $50 and are winning $75, your reward to risk ratio is 1.5 ($75/$50). A reward to risk ratio of more than 1 is good as it means you are at least winning more than you are losing and can cover the commission or fees you have to pay over your trades.

You can still have profitable trades if your winning rate is lower but the reward to risk is higher. You can mix and match strategies and decide your preferred settings. In general, a winning rate of 50% and a reward to risk ratio of at least 1.25 is good to go.

2. Mistake of Trading Without a Stop Loss

A stop loss is a must! Note that a stop loss is a must to save yourself from the misery of huge losses. If a price goes in the opposite direction, a stop loss helps you save yourself from the downside risk.

For example, if you buy a currency pair GBP/USD at 1.1110 and if you place a stop loss at 1.1100, if the prices go down from 1.1100, your order would automatically get sold and saves you from the further slump in the currency.

3. Averaging Positions to Cover Your Losing Trades

Many times traders keep on adding positions to average their trades, and that can be one of the biggest forex mistakes that you can make. If the price moves in the opposite direction, you should better sell your positions. The forex market is volatile, and the currencies pairs can go much in the opposite direction than you can think of.

The best thing you can do here is to decide a proper trade size and place a stop loss. A stop-loss would stop you from losing more.

4. Taking risk More Than You Can Afford

Deciding how much your existing forex account worths and how much you should risk is an essential part of avoiding a big forex mistake. On average, a day trader can afford to lose around 1% of their capital over a single trade. It also means that they place their stop-loss order in such a way that they do not lose more than 1% in a single trade.

Losing is a part of trading, but how much you can afford to lose weighs more. You can lose a little in your trades, but losing more than 1% on every trade would eventually kick you out of the trading zone.

You are advised to set a particular percentage that you can lose in a single day. If you can afford to lose 2%, strictly set your stop loss according to that. Losing can be an addiction as it comes with a poison called hope. So, be a disciplined trader and trade strictly within your limits.

5. Getting in a Trade to Win It All Back

Trading has to be done without emotions. With the entry of emotions, logic takes a backseat. Many a time, even if the risk management strategy is in place, you tend to ignore it for winning your losing trades back. But that’s a very destructive thing to do, as it can result in worst.

The chances of you getting hopelessly hopeful are high when you want to convert a losing streak into a winning one. There will always be “one more” trade that you think would make it happen, and in most cases, “the next” trade is always that one more trade.

Just like profits, forex mistakes are keen to compound. More greed can result in you taking more margin trades than you can afford, and that also means you would not be able to afford it if you lose.

The best way you can do to make your forex trading going in the opposite direction is to stick to the percentage rate that you can afford to lose. For example, if you can afford to lose 1.5% in a single trade, and 3.5% in a day; do not go beyond that.

6. Indulging in Forecasting the News

Economic events across the globe affect the forex market. Thus, when you are trading currencies, try to avoid anticipating the moves. The currency pairs are very sensitive to global news, and your wrong prediction can make you lose your hard-earned money. Instead, wait till the news is out and then trade accordingly.

If you think that placing a trade before the news burst will make you win big, that isn’t the case. Forex prices tend to move in both directions, very rapidly and sharply. As a result, you being in the wrong trade has higher possibilities, and within seconds, you would be having a big losing trade.

Also, another problem here is liquidity issues. When news breaks, the bid and ask spread (the highest rate to buy and the lowest rate to sell) is big, and it can result in you not being able to exit a trade on time.

However, there are a bunch of strategies that you can use instead of predicting the news. One such strategy is the Non-Farm Payrolls Forex Strategy. You can profit from the volatility and can avoid unnecessary risks by using it.

The Non-Farm Payrolls Forex Strategy is a strategy for EUR/USD, in which a trader takes a trade prior to the release of the non-farm payroll data. The data is released on the first Friday of every month. It states how to enter a trade, which position to take, what should be the position size, and all the other aspects related to managing the risk.

7. Opting for a Wrong Forex Broker

Apart from trading, one of the biggest forex mistakes you can make is in choosing a suitable and reliable broker. If the broker that you have chosen is not stable enough and the accounts are poorly managed, you can get into financial constraints. In addition to that trading, scams are also not new!

While choosing a broker, try to find answers to various questions like why are you choosing this broker, what you want to achieve, what are the advantages you would get, what is the credibility of the broker, etc. You can also try the broker by using the demo services or by trying a small amount.

8. Taking Multiple Correlated Trades at the Same Time

Diversification is great, but diversification requires a great deal of knowledge and experience of the forex market. Following the diversification rule, you can get inclined towards taking multiple trades in a day to spread the risks. But, the wrong selection of trades can increase the risk instead of diversifying it.

If you take similar kinds of trades in the forex market, the chances of them being correlated are high, which may result in the same type of risk but multiple times dangerous! If you win, indeed, you would win big, but if you lose, you may lose more than what you can afford. To avoid it, take multiple trades, but the trades should not be correlated.

9. Mistaking Long-term Singles for Short-term Trading

To gain knowledge of the financial markets, it’s good to read financial newspapers and take updates of real-time data. You may read a news piece and may feel that it has some specific implications on your currencies. But the probability that it has opposite implications on the day you trade that currency pair is high.

Fundamental news is good for the long-term trades, thus avoid to trade that information on short-term targets. Remember, economic news and fundamental updates affect the long-term trading prospects more than the short-term. Thus having an opposite bias from this can make you get distracted from your trading plan. Also, avoid gambling in your trade; it has to be systematic.

10. Getting into a Trade Without Planning

A trading strategy is an outline that says how your trade should be. It states all the aspects of a trade like when to enter, what to trade, how to trade, how much to trade, what should be the risk, etc. It is a kind of analysis for your trades.

Lack of a trading plan is nothing else but mere gambling. The best way to stop your forex trading from going wrong is to try your trading plan or strategy on a practice or simulator account. It would ensure that you do not lose your real money.

Forex trading has gone wrong in a day trading

Most common trading forex mistakes in day trading are:

• • Huge risk-taking: risk-reward ratio is bad. Trader risks hundreds of pips to gain few pips.
  • Overtrading: Trader trade a lot of trades, too often without patience.
  • Blind following of mechanical systems: Untested mechanical systems from Expert Advisors can destroy the portfolio.
  • Testing systems only a couple of years in the past instead of several decades. Good trading systems are robust, excellent in several decades.
    

The Bottom Line

These tips and tricks do seem generalized on how not to trade or more precisely, gamble, but remember entering into a trade without considering various angles and aspects are actually gambling! Hoping to win and trying to win by applying strategies are two different things.

One of the biggest forex mistakes is thinking of ways to make “Easy Money” or getting involved in such schemes. You should be the final executioner of trades and your trades should be driven by your knowledge, skills, and experience. Also, take note of the fact that sometimes the best trading strategy is to avoid trading. Trading is not a compulsive act; it requires patience and discipline.

You can follow these tips and tricks to avoid the most common forex mistakes a lot of day traders make, and eventually, with practice, you would learn from your mistakes. The foremost things to have as a forex trader are a trading plan, risk management practices, and a strong disciplined mind that stops you from deviating from the trading goals.

You want to trade currencies, you want to make profits, you want to dwell more in-depth into the market, but the question is how you will do it? Where will you do it? The answer is- forex broker. You may think why do I need a broker for forex, well this article would answer all your doubts.

Is it possible to trade forex without a broker?

Interbank foreign exchange markets consist of the largest commercial banks and securities dealers. In theory, people can do foreign exchange without a broker. They can do foreign exchange using an exchange office or bank. For an example, if a trader believes that USD will go down and EUR will go up, a trader can exchange dollars to euros, buy EUR. In that case, the trader needs to have a huge amount of money because his leverage is 1:1. However, professional retail traders need brokers. The retail traders that use leverage can not trade without brokers.

As we know, the forex market is dominated by the interbank funnel; the big investment banks decided the exchange rates which retail forex traders are supposed to trade ultimately. A forex broker here plays the role to connect an individual forex trader with the foreign exchange market. You have to open a forex trading account with a broker in order to trade currencies. It is similar to opening a bank account. You store money in your bank account; you store currency trades in the forex trading account.

In the forex exchange market, currencies are traded in pairs. For example, if you buy EUR/USD at 1.1100, you are said to hold USD but in the worth of Euros. You need the price of Euro to shoot up to gain profits over the USD prices.

Why Do You Need a Broker for Forex?

For anyone wondering why I need a broker to trade forex, here is the answer. When the brokers were not in the scene, traders literally had to have large sums of money to trade in the forex market in addition to making a good relationship with a bank so that they could trade currencies. With the entry of Forex brokers, these issues got eliminated. Now, all you have to do is to open an account with a broker, and you are good to go!

You can trade your preferred currencies and hold it in your forex trading account. Many brokers also teach and provide traders with useful information, materials, research, and training on how to trade. There are several brokers available nowadays, like Forex.com, IG, CMC Markets, etc. You can choose one as per your requirements and preferences.

How Do Forex Brokers Work?

Forex brokers give you the platform to trade various pairs of currencies at your convenience. Though these services are not absolutely free of cost as a broker charges you with pips. Pips are the amount difference between two currencies on which a forex broker levies its charges.

For example, if you are trading EUR/USD for 1.1100, your broker would add it to 1.1110. That’s the fee that the brokers collect for allowing you to trade through their platforms. Now if you close and book profit immediately, the broker would charge you on your profit or spread. A spread is a difference between the market price and the price you paid for the trade.

Often traders do not notice such a small spread gap and thus forex broker profit with small pips.

A forex broker also allows its trader to access the forex leverage and make profits. Using forex leverage would give you the wings to take more extensive trades, even with a small amount in your forex trading account. For example, if your forex trader gives you 10:1 leverage, it means that if you have $20 in your forex account, you can trade currencies worth $2000. It gives traders more opportunities to earn profits, but at the same time, big amounts mean big profits for the forex broker as well.

Even if you lose your trade, a forex broker will continue to earn profits through the spread of the market price and the amount you paid for the trade. Forex brokers provide you with easy and rapid access to your accounts in return for these fees. All the forex brokers work in a uniform way and are regulated by the NFA (National Futures Association) in the case of the United States.

The Last Words

Remember, your forex broker is the key to you and your forex trading, thus choose it wisely and opt for credible brokers only.

If you are new to forex trading and don’t want to lose money – Practice! There are many brokers that provide online practice accounts. You can get your hands on trading and get an idea about your strengths and weaknesses without losing your real money.

You can also learn about the forex market through forex trading courses and reading financial newspapers or research papers. It may seem a little hard in the beginning, but with experience and after a few mistakes, you will learn the deal.

Trading in the forex market to make a profit requires preciseness in choosing the accurate time suitable to the currencies you are trading in. No doubt, the forex market remains open for 24 hours and seven days a week, but that doesn’t mean that you can profit whenever you enter the market.

If your preferred trading currency is USD/JPY (the U.S. dollar/Japanese Yen), there are certain times that can favor your trade through enough volatility in the market – high liquidity. The best time to trade USD/JPY is a period of high liquidity during the European market from 7 a.m. to 4 p.m. GMT and/or during the USA market from noon to 8 p.m. GMT. The biggest liquidity is in the period when European and USA market sessions overlap from noon till 4 p.m. GMT. So the best time to trade USD/JPY EST (Eastern Daylight Time) is from 7 AM till 11 AM EST. Of course, some trading strategies based on low volatility or trading strategies based on trading during economic news do not trade in high liquidity period and traders trade on different time.

In practice, there is no best time for trading because various traders use various strategies. There is no consensus about the best trading time for USD/JPY but majority traders suggest that a period of high liquidity is the best period for trading base currencies.

Please look at this video where trader David Morrison talks about the best time for trading especially base currency pairs like USD/JPY is:

Why Should You Trade USD/JPY At the Best Time?

The forex market remains open from various markets across the globe, and thus you will always find a market open to trade currencies. In the U.S. on Sunday night, the first markets to open are the Asian and Australian forex markets. After this, the European market gets open. It gives traders around the globe the opportunity to trade at any time.

Though the shortcomings lie in the fact that not all the markets would be the best time to trade JPY pairs. When the London market opens, it gives immense opportunities to currencies like the British pound (GBP), Euro (EUR), and Swiss franc (CHF). In a similar manner, when the New York market opens, it gives profitable trading potentials for currencies like the U.S. dollar and the Canadian dollar.

When it comes to USD/JPY, they witness quite stable trades throughout the days as both are highly traded currencies. The session timings are presented as the Forex Market Hours and can be noticed using forex tools. You can choose your preferred time as per your country’s time zone.

Also, it is important to note that daylight saving time affects forex trading. For New York and London markets, trading hours slide for one hour when it’s warmer months in the Northern Hemisphere.

So, if you do not trade as per the suitable time, you would miss out on the potential to gain profits as the volatility would not be favorable.

The Best Time to Trade the USD/JPY

One of the best times to trade USD/JPY pairs is to trade it between 12:00 and 16:00 GMT as this time London and New York, both markets are open. This period provides the best window for the price movements. In exceptional cases, a window till 16:00 GMT also proves favorably volatile. It gives better chances to gain profits.

As the volatility is high during this period, it gives preferred price rangers and high liquidity. Thus, it increases the overall efficiency of currency trading. If you enter your trading capital during this period, you have better odds of winning trades compared to other timings. Using the trading and tacking tools would give you niche time frames to get good moves in real-time.

When Not to Trade the USD/JPY?

The price movement activity for the USD/JPY remains stable for the most part of the day, though there are times of high volatility. Though high volatility is good, in fact, you should avoid trading when the volatility is too low. The reason for this lies in getting compensated for the currency trades you buy as low volatility would not cover you for the spread or commission you have to pay.

For the USD/JPY pair, avoid trading between 21:00 GMT and 00:00 GMT. At 00:00 GMT, the Tokyo market gets open and it is a kind of subdued period of this currency pair. Also, when the Tokyo market closes, the London market opens. The timing between these two trading activities lies from 03:00 to 05:00, which is another time period to avoid trading the USD/JPY.

As these currencies are quite famous, their volatility is considerably great during the day, but during the above stated time, it drops. However, you can always check the most profitable times to trade during the forex trading tools available online.

Learn and Practice

Though these favorable times promise high volatility, you won’t gain profit if you don’t know the forex market functionality. The best way to overcome this shortcoming is to educate yourself and learn about the forex market from the credible sources available.

You should also try to trade in more than one currency pair. The EUR/USD and the GBP/USD are also like the USD/JPY and have high volatility. You can develop your trading capabilities for more than one currency pair and identify the best times to trade in those pairs. It would give you diversification, and diversification is always welcomed in trading. So, learn and practice- these two main tools would help you gain winning trades in the long run for sure.

Let us repeat one more time: In practice, there is no best time for trading because various traders use various strategies but high liquidity is good opportunity for trading USD/JPY.