Limit Order

Different brokers have different meanings when they use the term "Limit Order". When we use it, we mean it in the same way that Oanda and Gain Capital use it. FXCM calls these kinds of orders "Entry Orders". Other brokers use the term "Stop Order" (which also has a couple of different meanings).

A Limit Order (as we mean it) is one placed away from the current price, and is only turned into a trade if the price reaches that requested price.

For Long trades, you place a limit order above the current price. Only if the price goes up to or above that limit order's price will a trade be opened. Similarly, for Short trades you place the limit order below the current price. The order would only be turned into a trade if the price went down far enough.

For example, if you place a Long limit order at the price of 1.2345, you are not asking for an entry at 1.2345 or better (lower) - you are asking for an entry only if the price goes to 1.2345 or above. Kind of like setting a trap and waiting for the price to spring it.

See also:

• market order