A market order is an order to buy or sell a specific currency, which is to be filled immediately at the current exchange rate quoted on the screen. Under normal market conditions, orders are executed automatically, within 2 ? 5 seconds.
It is important to note that during extremely fast market conditions, it is possible for a trader to get requoted. This means that when prices are moving rapidly, the price quoted on the screen may have already changed by the time the order is processed. Under no circumstances will a market order be filled at a price which the client has not approved.
There is a feature on the order screen of the Visual Trading platform that allows traders to specify a Trader’s Range when placing a market order. When entering in your Trader’s Range, you are specifying the maximum number of pips of deviation from the quoted price (in either direction) that you are willing to accept. For example, if you place a market order to buy GBP/USD when the quoted asked price is 1.6864, and you specify a Trader’s Range of 5, that means that you are willing to accept a price anywhere between 1.6859 and 1.6869. If no Trader’s Range is specified, it is by default set to 0, meaning you are only willing to accept the quoted price. If the Trader’s Range is set to 0 and the market is moving very fast, then it is possible for you to get requoted on a particular currency price. Trader’s Range is an optional feature.
A limit order is an order that is executed at the moment the market price touches the client’s specified price. The executions of these orders are under the supervision of the dealing desk and remain in effect until the client cancels the existing order. Because they will not be executed unless they reach your desired price, limit orders may or may not get executed. For example, if you want to buy GBP/USD, but not until the price drops to 1.6860, you would place a buy limit order at 1.6860. If the price never drops to that level, then the order will remain unexecuted, but it will still be a live order until you cancel it.
A stop order is a type of limit order that is placed to lock in a specified gain or loss, closing the position. For example, if you bought GBP/USD at 1.6864 and price has risen to 1.6874, giving you a profit, you may want to lock in that profit in case the price ends up falling. So you would place a stop-loss order to sell at, say 1.6870. This assures that if the price does drop, your position will be closed automatically with a profit. Similarly, you could enter a stop-loss order to sell at 1.6854, thereby limiting your potential loss on the position if the price drops.
Stop and limit orders work for both long and short positions.
By convention, buy limit and sell stop orders are entered in below the current market price. Sell limit and buy stop orders are entered in above the current market price.
Hedging is a very useful tool for those traders that know how to use it properly. Hedging an open position involves placing an exactly opposite trade. Normally, the opposing trades cancel each other out, closing the position. But with our hedging feature, both trades remain active. For example, let’s say you bought GBP/USD. You can hedge your position by selling GBP/USD. Both will remain separate active positions, rather than canceling each other out. Hedging gives the trader upside potential, whichever direction the market heads. It is important that you fully understand how hedging works and how to properly use it before placing any hedge orders. Hedging is an additional feature we have added for the benefit of our clients, and is by no means a required action.
Orders are processed quickly within 2 ? 5 seconds. This fast execution assures that the price quoted on the screen is the price at which your order will be filled. However, during periods of extremely heavy volume, it is possible for an order to take upwards of 18 seconds to process, possibly resulting in a requote. CMS prides itself on having the most efficient order entry system available and is dedicated to assuring prompt and expeditious order processing.