What is a market order?

Stop Loss and Limit Orders are some of the most basic but effective ways to make payments and manage your bottom line risk. Market orders open a position at the current price in order to achieve the quickest execution, so they are the best option when the primary objective is to buy foreign currency as quickly as possible. More advanced FX orders, on the other hand, allow you to buy currency at your chosen exchange rate, with the trade being processed if or when the rate is met. This means that you receive an exchange rate with which you are happy, and it also means that there’s no need to monitor the market or worry about your currency exposure.

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What are the benefits of a market order?

Market orders are the perfect choice for speed and simplicity in foreign exchange. Need to get funds abroad quickly? A market order executes your transfer immediately at the current market rate. No need to wait for a specific price or handle complex contracts. This makes them ideal for smaller, urgent transfers or situations where you want to capture a favourable rate that's available right now. They also offer transparency, letting you see the live exchange rate upfront, and a straightforward process, making them a great option for those new to foreign exchange.

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What's a limit order?

FX limit orders are used to buy currency at a lower cost than the present exchange rate allows. They are the greatest alternative when your currency is on a positive trend and you believe it will continue to increase. You can specify an exchange rate at which you are willing to buy, and once that rate is met, your exchange will complete and your transaction will be made.

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What's a stop loss order?

Stop loss orders are the polar opposite of limit orders: they should be used if you anticipate the exchange rate's upward trend will reverse and the rate will move against you. Stop loss orders are meant to minimise your exposure to such swings in the currency markets, ensuring that you do not suffer from unfavourable exchange rate shifts.

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Why would I need a market order?

Various forms of FX orders offer a wide range of business requirements and situations. Let's say you choose a limit order. If the GBP to EUR exchange rate was 1.12, you may strive for a higher rate, say 1.15. If this rate is met and your aim is reached, your exchange will be completed automatically.

 

A stop loss order, on the other hand, protects you from negative rate movements by allowing you to establish a stop limit at a lower rate (1.10, say). If the rate falls to as low as 1.10, your exchange will be made at that price, protecting you from further drops in the exchange rate's value.