ORDER TYPES

Orders are flexible trading tools that allow you to fully or partially open, close, or amend positions. They are a valuable tool for managing risk.

Boston Merchant Financial offers a range of orders to help you get into, and out of, positions at the price you want to.

Limit orders

A Limit Order is an instruction to buy or sell a market when it reaches a price that is better than that prevailing, at the time of placing the Order. It can be used to open a new position, where you anticipate a more favorable market price (buy or sell). It can also be used to close an existing Open Position, when a market reaches a certain level.

E.g. If our quote for UK 100 Rolling Spread is 5873.8 / 5875.8

To open a new position:
If you thought the market was going to reach 5700.5 and then reverse and go higher, and you had no Open Position in the market, you would leave a new Limit Buy Order at 5700.5. If the price reaches 5700.5 or lower, then the Order is activated and you would have a new long (buy) position in the market.

To close a position:
If you were long (had a buy position) in the market and wished to take your profit when the market reached 5950.8, you would leave a Limit Sell Order at 5950.8, which would activate when the Sell price hit 5950.8 or higher. If activated, this Order would close your position and realize any profit (or loss if you opened your position above 5950.8.).

Stop orders

A Stop Order is an instruction to buy or sell a market at a price which is worse than that prevailing, at the time of placing the Order. It can be used to open a position if you think a market could move even higher once it moves above a particular level (when buying), or even lower if it moves lower than a particular level (when selling). Stop orders can also be used to close a position (a tool for managing risk).

E.g. If our quote for Australian 200 CFD is 5100 / 5106

To open a new position:
If you felt that if the market traded up to 5150 and it would continue even higher, then you would leave a new Stop Order to Buy at 5150. If the Buy price hit 5150 or higher, the Order would execute and open a long position.

Stop loss orders

A Stop loss order is an instruction to buy or sell a market at a price which is worse than the opening price of an open position (or worse than the prevailing when applying the stop loss to an existing open position). It can be used to help protect against losses.

E.g. If our quote for Australian 200 CFD is 5100 / 5106

To close a position using a stop loss:
If you were long in the market and wished your position to be closed if the market went beneath 5000, then you would leave a Stop Loss Order linked to that position to Sell at 5000. If the price fell to 5000 (or lower) then the Stop would be executed and close that position.

Please note that there is a risk that market gapping may occur. If this does occur, the best available price could be significantly lower (or higher) than the price set on the order. In order to avoid this, Guaranteed Stop Losses may be used.