Pulling the Trigger

It’s trigger-pulling time, pardner. This section assumes you’ve
signed up for a practice account at an online forex broker and
you’re ready to start executing some practice trades.
You make trades in the forex market one of two ways: You can
trade at the market, or the current price, using the click-and-
deal feature of your broker’s platform; or you can employ
orders, such as limit orders and one-cancels-the-other orders
(OCOs).


Clicking and dealing


Many traders like the idea of opening a position by trading at
the market as opposed to leaving an order that may or may
not be executed. They prefer the certainty of knowing that
they’re in the market. Actively buying and selling are also
elements that make trading and speculating as much fun as
hard work.
Most forex brokers provide live streaming prices that you can
deal on with a simple click of your computer mouse. To exe-
cute a trade on those platforms:
1. Specify the amount of the trade you want to make.
2. Click on the Buy or Sell button to execute the trade.
The forex trading platform responds back, usually within a
second or two, to let you know whether the trade went
through:
If the trade went through, you’ll receive a pop-up confir-
mation from the platform and see your open position list-
ing updated to reflect the new trade.
If the trade fails because the trading price changed
before your request was received, you receive a response
indicating “rates changed,” “price not available,” or

something along those lines. You then need to repeat
the steps to make another trade attempt.
Attempts to trade at the market can sometimes fail in
very fast-moving markets when prices are adjusting
quickly, like after a data release or break of a key techni-
cal level or price point. Part of this stems from the latency
effect of trading over the Internet, which refers to time
lags between the platform price reaching your computer
and your trade request reaching the platform’s server.
If the trade fails because the trade was too large based
on your margin, you need to reduce the size of the trade.
Understand from the get-go that any action you take on a trad-
ing platform is your responsibility. You may have meant to
click Buy instead of Sell, but no one knows for sure except you.


Using Orders


Orders are critical trading tools in the forex market. Think of
them as trades waiting to happen, because that’s exactly what
they are. If you enter an order and a subsequent price action
triggers its execution, you’re in the market, so be as careful as
you are thorough when placing your orders in the market.
Currency traders use orders to catch market movements
when they’re not in front of their screens. Remember: The
forex market is open 24 hours a day, five days a week. A
market move is just as likely to happen while you’re asleep or
in the shower as while you’re watching your screen. If you’re
not a full-time trader, then you’ve probably got a full-time job
that requires your attention when you’re at work. (At least
your boss hopes he has your attention.) Orders are how you
can act in the market without being there.
Experienced currency traders also routinely use orders to:
Implement a trade strategy from entry to exit
Capture sharp, short-term price fluctuations
Limit risk in volatile or uncertain markets
Preserve trading capital from unwanted losses
Maintain trading discipline
Protect profits and minimize losses


We can’t stress enough the importance of using orders in cur-
rency trading. Forex markets can be notoriously volatile and
difficult to predict. Using orders helps you capitalize on short-
term market movements while limiting the impact of any
adverse price moves. While there is no guarantee that the use
of orders will limit your losses or protect your profits in all
market conditions, a disciplined use of orders helps you to
quantify the risk you’re taking and, with any luck, gives you
peace of mind in your trading. Bottom line: If you don’t use
orders, you probably don’t have a well-thought-out trading
strategy — and that’s a recipe for pain.