Forex risk management tools: automatic trading with popular market orders - TopForex.Trade

Forex risk management tools: automatic trading with popular market orders

An expert review of the basics of trading with risk management tools in the Forex market: key order concepts, distinctive features, and their usage examples. Following the professionals with Social and Copy trading and comparison of the best Forex brokers with user-friendly trading platforms, bonuses up to 100% on the initial deposit and free VPS service.

Forex risk management tools: market orders and their types

forex risk management tools

Getting into the Forex market, traders aim to increase their capital. Yet, everyone bears a certain level of risk in the form of possible losses. In order to save funds and protect themselves from failed deals, traders use multiple risk management tools like orders.

An order is an instruction from a client of a brokerage company to carry out any trading operation when the asset price reaches a certain level. There are various orders in the terminal including pending, position closing, and conditional ones.

With the help of orders, traders can enter the market, fix potential profits, control possible losses, and trade according to their trading strategy. In addition, orders allow you to manage the status of open positions. Let’s take a look at each order individually.


Pending orders in the Forex market

forex limit orders

Pending orders execute a trade at a guaranteed price. If the forecast turns out to be incorrect, for example, the position becomes cheaper, but does not reach the desired minimum and goes up, then the transaction will not take place, but it will not disappear either. When placing a limit order, it is important to set realistic forecasts and not forget about outstanding commands. A pending trade forgotten by a trader may unexpectedly work months later, and the result will not always be pleasant for the trader.

Pending orders can prevent negative slippage, protecting the trader from possible losses. If profit is your priority and you’re willing to miss out on a trade if your forecast doesn’t come true, put together a limit order.

Sometimes a deal on a pending command does not go through even when the price threshold is reached. If there are not enough buy orders or sell offers, the broker will not be able to conclude a deal and conduct an operation on favorable terms for the trader. At the next quote, the situation may change, conditions for buying or selling will appear, but the price will no longer meet the specified conditions, and the transaction may not be completed.

To use limit orders, it is recommended to correctly set prices taking into account market positions. It is worth familiarizing yourself with the restrictions of the site in advance as sometimes exchanges set a limit on the minimum difference points between the current and desired value.

There are four types of pending orders:

Buy limit in the Forex trading

A buy limit is an order to buy positions when the set lower limit is reached. Buying at extreme lows usually is done with forecasts for a fall followed by a rise. When the chart reaches the predicted low, the broker opens a trade.

Forex trading with a sell limit

A sell limit is an order to sell an asset when the expected high value is reached. When prices rise, it is not recommended to immediately sell positions, as there is a risk of losing profits. Traders try to predict the high point in value and sell it before the fall. Buy limit + sell limit is one of the common tools to get predictable profits.

Buy stop in the FX trading

Buy stop is an order to buy an asset in the future if the price set by the seller reaches the level set in the order parameter. If the asset continues to rise in price, but you do not have the opportunity to make a deal on the required volume immediately or you are not sure that the chart will not collapse, place a buy order at the maximum acceptable threshold for you. When the chart tops out, you can sell potentially even higher, but be prepared for a slower uptrend.

Sell stop in the Forex market

A sell stop is an order to sell an asset in the future if the asking price reaches the price set in the order parameter. When setting a sell stop, its price will always be less than the market one. If you have an asset that is steadily declining in value, then plan to sell and then buy it back at a reduced price.


Position-closing orders in the Forex market

position-closing orders forex market

Position closing market orders are used by traders to reduce risk, allowing them to withdraw funds on time or prevent spending. There are three types of such orders: take-profit, stop-loss, and trailing-stop.

Take-profit in the Forex market

Take-profit allows you to set the conditions for completing a transaction with potential profit fixation. When buying positions, traders choose a peak value higher than the current one, and when selling, they set a lower limit, below which it is unprofitable to part with assets.

If the buy or sell is completed on your terms, you need a tool to keep your earnings in the event of an unexpected sharp change in trends, which is what a take-profit is.

Stop-loss Forex trading

Stop-loss prevents possible losses if the chart does not develop according to the forecast. Traders choose points on the chart that corresponds to the acceptable level of losses: for buying – below the momentary value, for selling – above. Stop-loss allows you to avoid situations in which losses reach unpredictable sizes due to sudden market jumps.

Forex trading with trailing-stop

Traders can increase the effectiveness of a stop-loss by combining it with a trailing-stop, which is a trading order in which the stop-loss price is not fixed at a single absolute amount, but rather set at a certain percentage or moved to the trader’s desired level.

When opening a trade, the market participant sets the gap from the current price to the trailing stop-in points. When the price rises, it pulls a trailing stop. Then, when the price finally stops rising, the new stop loss price stays at the level it was dragged to, thus automatically protecting the trader’s downside by locking in profits when the price hits new highs.

Unlike stop loss, the main function of a trailing stop is profit taking on order, rather than limiting risks, transferring a position to breakeven. This tool is an indispensable assistant in case of strong market volatility, and when it is not possible to monitor the terminal.


Conditional order in the Forex market

conditional forex order

Conditional orders are more complex, compound types of commands that combine several conditions for a trade-in different circumstances. They are used for maximum automation of the trading process and are entered or canceled by the system without the participation of the trader upon reaching the criteria specified by the user and consist of a list of basic orders.

One Cancels the Other (OCO) are orders in which all remaining commands are automatically canceled when one of the conditions is reached and the associated order is executed. They simultaneously provide maximum profit, help to fix it and step back if the situation changes dramatically. OSOs consist of the main command and a list of secondary orders that take effect only when the primary condition is met.

Conditional orders are placed before the opening of trading positions. They provide greater flexibility and remove the need for a trader to constantly monitor the situation in the market.


Forex orders execution

forex orders execution time

Some exchanges offer additional options to fine-tune orders. More often they can be seen in special sections for traders:

  • Fill or Kill (FOK) — the order must be executed at the time of its installation, if this is not possible, it is deleted.
  • Good-after-Time (GAT) — the order is placed in the system not immediately, but at the time set by the trader.
  • Good-till-Date (GTD) — the order is active until the period specified by the trader.
  • Hidden — Order data is not captured in order lists or market data. Usually, the option is used when placing large orders, so as not to cause a panic in the market.
  • Immediate-or-Cancel (IOC) — the part of the order that could not be filled when it was its turn is removed.

To manage risks, traders most often use the second and third options, as it helps to save time on constant market monitoring, and works according to set values, which will save and potentially increase funds.


Basic examples of using Forex orders

forex orders example

In exchange trading, an order is a command that a trader gives to complete any transaction. Different types of orders, which are used in popular trading platforms like MetaTrader, make the client’s work comfortable and help to buy and sell assets and minimize losses. Let’s look at a few basic examples of how these tools can be used.

For example, the trader bought a share at a price of $70 per one. To protect himself from the loss, he placed a $60 stop-loss order. When the quoted price reaches this limit, the share will automatically be put up for sale and sold at a price of $60 or close to it, if there is no such offer on the market, it can be given away for, for example, $59.

The trader determines in advance the price at which he will incur the maximum allowable loss for himself, after which he informs the broker about it.

Another use case concerns the stop limit. The trader bought a share of a company for $100 and decided that he would sell it if the price drops to $90 and at that point he places a stop-limit order. When the share price reaches $90, the order will be automatically executed. If the price does not reach this mark, and, for example, drops to $89, bypassing the $90 mark, the stop limit will not work.

If a market participant needs to take a profit and he is not ready to risk waiting for a turning point in the market, he can use take-profit order. For example, a trader bought 50 shares at $100, spending $5 000. This is a rather volatile asset since the price of a share fluctuates constantly. The trader is afraid that until he is not at the terminal, the stock price will reach a high point and fall back, and he will not have time to take profits. Suppose he would be quite satisfied with the income of $500 for the sale of these shares, so he places a take-profit order, in which he indicates the desired profit, and calmly closes the terminal. If the shares rise to $110 per one, the terminal will automatically close the deal, giving a profit of $500.

Take-profit is an easy way to settle for a satisfying profit without taking risks or wasting time for a larger gain.


Forex orders using opportunities

forex orders ooprtunities

Forex orders allow the traders to control prices as market participants can specify the desired price level entry point at which the trade will be executed. The ability to assign a price level simplifies buying and selling assets without having to constantly monitor the market.

Besides pending orders at a certain price save the trader time. By setting the parameters, clients do not need to be online when the trend line is broken or when the price breaks out of the price channel. Market participants can automatically enter a trade if the price is behaving as planned or leave it when it is too costly.

Traders can also protect themselves from risks by setting closing orders and managing the transaction without being at the computer. This provides not only peace of mind, but also will not allow you to lose your funds.


Social and Copy Forex trading

social and copy forex trading

Risk management tools help many traders prevent possible losses of funds and fix profits on time. In addition to such features as stop-loss, take-profit, etc., Forex brokers offer to use Social and Copy trading, with which market participants can trust the strategies of professionals, copying them on their terminal, which helps alleviate the lack of experience and time for market analysis.

Social and Copy trading are two terms that are often used interchangeably but have some slight differences. In the case of Copy trading, a professional trader links his personal account to the platform so that other participants can copy his trades, earning from it. Subscribers, in turn, can earn on Forex without deep knowledge and experience. In addition, they can control copied trades – change the number of funds in accordance with their deposit and money management, and even close trades manually.

Social trading is one step further than Copy trading as it allows you to not only copy trades, but also interact with other users, ask questions, evaluate their performance, and much more.

One of the world’s leading social trading networks is eToro. The company has brought together millions of users around the world and turned them into one social trading network where participants can share their ideas, but also find professionals to copy according to their requirements and needs.

eToro also has a copy portfolio feature, where users will repeat not only individual deals but also transactions for assets combined into groups, trades of company partners, and others.

Another international broker, HF Markets, offers HFcopy, an original broker’s copy trade feature that allows traders to earn by creating trading strategies as a strategy provider or copy deals as a subscriber. With HF Markets you can not only join the global community of traders but also track transactions at any time, set your rescue level, and withdraw your funds when you desire.


VPN for secure Forex trading

vpn for forex trading

A VPN for Forex trading is important for two purposes: to secure yourself and your access data to the trading terminal when connecting to the Internet through public access points and to unblock brokerage sites that, for one reason or another, are not available in the country, but nevertheless work with its clients. To register and work on Forex, you can use special browser extensions or download a special application to your computer to use VPN.

NordVPN is one of the VPN providers that reliably protect Forex trading using the most powerful encryption algorithms, Double VPN, VPN + TOR, and other technologies for complete confidentiality.

Click the button below to get the best VPNs deal for Forex trading: 

NordVPN is not limited to security features and also provides separate servers for games, torrenting, and streaming services. In addition, a large number of global servers in 60 countries provide fast access from anywhere in the world.


Top Forex brokers with risk management tools

The ability to use orders is only half the success, and for their correct application, you need the skill of planning and forecasting the market, which is based on Technical and Fundamental analysis.

Also, before entering the real market, it’s better to test your ideas on a free brokerage demo account, the conditions of which are as close as possible to real ones.

It should also be noted that in the Forex market, a trader can open several accounts in order not only to select favorable conditions for each preferred commodity but also to try various derivatives and collect all kinds of Forex bonuses up to 100% on the first deposit.

Sign up, verify accounts and start trading with Top Forex brokers below to compare marketplaces, pick up multiple instruments, and compare order execution times.

Exness Forex trading

Exness is one of the leaders in providing online trading services, which serve tens of thousands of users around the world. The broker offers a variety of instruments including Forex pairs, stocks, indices, metals, energies, popular Cryptocurrencies like Bitcoin and Ether, and more rare coins.

Clients can enter the market using the Meta Trader 1, MetaTrader 4, MetaTrader 5, or MetaTrader WebTerminal terminals as well as an original trading app for both iOS and Android. Among the presented accounts there are standard retail, and professional trading accounts, as well as a demo for improving your skills and creating new strategies.

Forex broker Exness has various ways to top up the balance. You can make a deposit using the following payment systems: bank transfer; bank cards Visa and MasterСard, Bitcoin, Tether, Perfect Money, NETELLER, WebMoney, and Skrill. 

On the broker’s website, traders can also find many useful tools including Trader’s Calculator, Currency Converter, Economic Calendar, Technical Analysis Indicator, and Trading signals to help you stay up to date and build your trading strategies based on the latest developments.

Exness adheres to strict security standards, which are guaranteed by the obtained licenses from regulatory organizations such as FCA, CySEC, FSCA, FSC, FSA, and others. Try trading with Exness right now using our dedicated button below.


AvaTrade Forex trading

AvaTrade is the largest web brokerage company in existence since 2006 with multilingual support and a wide range of platforms. Traders can work with a wide range of financial instruments including more than 60 currency pairs, CFDs on almost all underlying assets, various shares of American and European companies from major exchanges, Cryptocurrencies, metals, energy commodities, and much more.

The AvaTrade serves traders of all styles and levels of knowledge and therefore offers a wide range of trading platforms such as MT4, MT5, AvaSocial, AvaTradeGo, AvaOptions, and WebTrader as well as the AvaTrade mobile app.

For both market newbies and existing clients, the company provides a demo with a virtual balance of $100 000 to practice their trading strategies and practice using risk management tools such as stop-loss and take-profit.

On the AvaTrade website, clients can find lots of analytical and educational materials that will be useful in building their strategies, such as the economic calendar, fundamental analysis, regular market analysis, including the latest economic news, and other useful courses.

AvaTrade carefully monitors the transparency of all transactions, which is guaranteed by licenses from such world-famous regulators as MiFID, ASIC, the FSA and FFA, the FSB, IIROC, and the FSCA.


NAGA Markets Forex trading

NAGA Markets offers trading in over 950+ instruments, including Forex pairs and CFDs, Cryptocurrencies, indices, commodities, ETFs, and futures, as well as real stocks of various large companies on the MT4, MT5, NAGA Web App platforms as well as in iOS, and Android mobile apps.

NAGA Markets is a trusted broker that is also known for all kinds of Copy trading benefits. NAGA Autocopy is an innovative feature that allows you to automatically copy professional traders on the platform and learn from their experiences.

Two types of accounts are available to NAGA clients: demo one and live account. The demo account has $10 000 in its balance to try out trading strategies safely and get to know different risk management tools. As soon as you become more confident in your abilities and skills, you can switch to a real account, turning to a training account if necessary.

Besides, NAGA has a wide range of trading tools and educational materials to stay up to date and build your trading more efficiently such as NAGA academy, webinars, trading calculator, economic calendar, earning calendar, and NAGA Price Alerts.

NAGA supports multiple payment methods including debit/credit cards (Visa, Mastercard), Maestro, Discover, Paypal, GiroPay, Skrill, Eps, Ideal, etc.

Broker NAGA is widely known around the world and strictly complies with all requirements for transparency and safe trading, which is confirmed by licenses from regulators such as the FCA and CySEC.


XM Group Forex trading

XM Group is an international brokerage company providing access to a variety of financial instruments that can be bought and sold on the MT4/MT5 platforms, including currency pairs, stocks, commodities, and more with some of the most reliable and fastest orders available.

In addition, XM provides customers with a VPS service that allows them not to worry about the speed of the Internet connection, computer problems, or other distractions.

The broker XM has several types of accounts that differ in their conditions and are focused on different groups of clients such as Micro, Standard, XM Ultra Low, and Shares. Also, there is a demo account with a balance of $100 000 available for market beginners and experienced ones, where they can trade using the full functionality of the real-time charts, graphs, and market situation to accurately predict results and make strategies as close as possible to live trading but without losing real money.

The website dedicated to traders has a section with educational materials, traders can also attend free seminars conducted by employees of the Forex broker.

XM Group is licensed by such reputable regulators as ASIC, CySEC, IFSC, and DFSA. The broker will also welcome you with a 100% automatic entry Forex bonus. You can find out more about current bonuses and offers by clicking on our special button.


eToro Forex trading

eToro is one of the most famous classic and social trading platforms with over 2000 assets including stocks, commodities and indices, ETFs, currency pairs, Cryptocurrencies, and many others with low minimum deposits and minimal fees.

eToro has two kinds of accounts: retail and professional. Clients can also use a free demo account with $100 000 to practice in conditions as close to real as possible, as well as build a portfolio according to their preferences.

The market can be accessed through eToro’s own platform which is available through desktop and mobile versions.

The company holds a leading position in Social and Copy Trading which allows newcomers traders not only to select an experienced colleague and replicate their trading strategy but also to join a huge network of market participants and share ideas with others.

The company is trusted by millions of clients around the world as the broker monitors the security of transactions and strictly follows the rules of regulatory bodies such as FCA, ASIC, SFSA, and CySEC. Explore the Forex market with eToro and enjoy all the benefits of Social Trading with our dedicated button below.



Forex risk management tools - FAQ

In the Forex market, there are many risk management tools that, depending on the type of order, it can lock in profits, and maximize or limit losses such as buy and sell limit, stop-loss and take-profits, and others. In the article, we highlighted the types, examples of use, and distinctive features of main market orders, and also compared the best Forex brokers with the ability not only to use risk management tools but also to enjoy Social and Copy trading, as well as get demo accounts for the practice.
Limiting orders can and should be applied simultaneously with each other, with market or pending orders, and added at any time of trading, it all depends on your trading strategy. In the article, we revealed the concepts of orders, gave examples of their use, and also compared Top Forex brokers for safe trading with the ability to copy trades and use free demo accounts.
Risk management tools such as stop-loss, stop-limit, take-profit and others are indispensable for the implementation of the principles of money management, as they make it possible to manage the transaction, i.e. fix partial/full profit, move the stop to breakeven, and profit zone. Also, stop-loss relieves emotional stress, since there is no need to worry about the safety of the deposit if you open a position. In the article, we examined in detail how orders work, why a trader needs them, and also compared top Forex brokers with the possibility of Social and Copy trading, as well as a free VPS service for stable and safe connection.
The best Forex brokers for trading with risk management tools should have licenses from reputable regulators, a wide range of trading instruments, and user-friendly platforms with additional features. In our article, we have highlighted Top Forex brokers regulated by the FCA, ASIC, CySEC, and MiFID that offer competitive trading conditions, as well as the ability to buy and sell Cryptocurrencies, use Social and Copy features, and a free VPS service.
In order to keep their funds safe and protect themselves from various scammers and hacker attacks, as well as to hide their activities on the Internet, many traders use reliable VPN services. In the article, we reviewed one of the best VPN providers on the market with impenetrable encryption, a vast network of servers for making transactions without delay, and the ability to unblock streaming sites, download torrents, and bypass game geo-blocking.