Types of trading orders

Types of trading ordersTrading orders are a gold mine for binary options trader. By understanding the different types of trading orders and where they occur, binary option traders gain life-time access to sophisticated insights about the market and highly profitable trading opportunities.

What are the types of trading orders and why do they matter?

Trading orders are the orders that traders of conventional assets use. When stock brokers, for example, buy or sell a stock, they use a trading order. The important thing to understand is that trading orders do not always say, “I’m buying stock X now.” Often, a trading order says, “I’ll buy stocks X if it falls below price Y”, or, “I’ll sell stock X if it rises above price Y”.

For binary options traders, the ladder types of orders are of the utmost importance. Binary option require you to predict future price movements. Therefore, binary options traders need to understand the relationship of supply and demand. When it comes to financial markets, every price movement is the result of the relationship of supply and demand:

  • When demand exceeds supply, prices rise.
  • When supply exceeds demand, prices fall.

To know what will happen next in the market, you need to understand whether demand will exceed supply or the other way around. The first and most crucial step to understanding this relationship is understanding trading orders.

As a binary options trader you have to predict future price movements. These price movements are the result of the relationship of supply and demand. To predict price movements, you therefore have to understand how supply and demand can be created, ergo which types of trading orders there are.

Trading orders are order types used by regular traders. In contrast to investments in binary options, these types of orders create supply and demand for an asset and thereby influence its price. Therefore, they are very important to binary options traders who want to predict what will happen to an asset’s price.

Traders that understand the different types of trading orders can anticipate where they will appear in the market. They can find strategically relevant places where a specific type of trading order will appear in large numbers and where the market, as soon as it reaches this prices level, will trigger this large amount of orders all at once, thereby creating a strong movement in the direction of these orders.

By finding these strategically relevant places, traders can find ideal spots to invest in a binary option that they are very likely to win.

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Which types of trading orders are there?

In general, there are three different types of trading orders, two of which are important to binary options traders.

Market orders

Market orders are orders that are executed immediately, i.e. orders that say, “I want to buy asset X or Y NOW!”

Because market orders are executed immediately, they are hard to predict. A trader is buying or selling an asset immediately and for the current market price, which is a strong indication that the exact price is not that important to the trader. Maybe the trader is a long-time investor or a fund that has to buy and sell assets as customers buy and sell the fund. Market orders cause a big part of the random flickering that you can see on extremely short time frames.

For binary options traders, market orders’ unpredictable nature makes them uninteresting.

Limit orders

Limit orders are where things get interesting. In contrast to market orders, limit orders are not executed immediately. Instead, they allow traders to define a maximum price for which they are willing to buy and a minimum price for which they are willing to sell.

Traders can use limit orders in two ways:

  • Traders can place buy limit orders below the current market price to buy an asset once its price has fallen to a certain level. As soon as the market reaches the buy limit order’s target price, the order turns into a market order and is executed immediately.
  • Traders can place sell limit orders above the current market price to sell an asset once its price has risen to a certain level. As soon as the market reaches the sell limit order’s target price, the order turns into a market order and is executed immediately.

Traders use limit orders to purchase or sell assets near relevant chart formations such as trend lines, or resistance and support levels. As a binary options trader, you can learn to recognize the price levels by studying technical analysis, and use them to win a binary option by investing in the direction of the expected movement.

Stop orders

Stop orders are the exact opposite of limit orders.

  • Traders place buy stop orders above the current market price to buy an asset once its price has risen to a certain level. As soon as the market reaches the buy stop order’s target price, the order turns into a market order and is executed immediately.
  • Traders place sell stop orders below the current market price to sell an asset once its price has fallen to a certain level. As soon as the market reaches the sell stop order’s target price, the order turns into a market order and is executed immediately.

Stop orders help traders to exit a long position or enter a short position once the market has completed a price formation. Consequently, they also appear in bunches at relevant places that technical analysis can help you to find and to use to win a binary option.

Types of trading orders
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