Forex order types explained: market, limit and stop orders
Every trade starts with an order. This guide shows where each order type sits against the current price, which price triggers it and what can go wrong in a fast market — with a diagram for each one.
Forex order types are the instructions you give a platform to open or close a trade. A market order executes immediately at the best available price. Pending orders wait for a price: a limit order buys below or sells above the current price, and a stop order buys above or sells below it.
Stop loss and take profit close a position; a trailing stop is a stop loss that follows the price.
What are the main forex order types?
Every order answers two questions: when and at what price. The answers split orders into three families.
- Market orders — execute now, at the best price available. The speed is certain; the exact price is not.
- Pending orders — limit and stop orders that wait at a chosen price and trigger only if the market gets there.
- Exit orders — stop loss, take profit and trailing stop, which close a position at a loss limit or a target.
Most of them are set from the same ticket, on TradeLocker straight from the chart or in the order window of MetaTrader 5.
- 1Side and typeBuy or sell; market, limit or stop.
- 2PricePending orders only: where it waits.
- 3VolumeThe lot size: what each pip is worth.
- 4Stop loss and take profitThe two exits.
- 5ExpiryHow long a pending order waits.
A buy limit 30 pips below the ask. At 0.10 lots on EUR/USD a pip is worth about $1, so the plan risks about $30 to target $60.
What is a market order?
A market order buys or sells right now, at the best price available when it reaches the market. A market buy fills at the ask; a market sell fills at the bid. The gap between the two, the spread, is paid the instant the trade opens, so every new position starts slightly negative.
When traders use market orders
When getting in matters more than the exact price. The trade-off is slippage: the price can change between the click and the fill. On a major pair in normal hours the difference is often too small to notice; around big releases it can be several pips.
Because the spread is paid on every market order, active traders compare how it is charged: a tight spread plus commission on a Raw Spread account, or a wider spread with none.
Limit vs stop orders: buy limit, buy stop, sell limit, sell stop
A pending order waits at a price you choose. There are four basic types, and one rule sorts them: a limit order expects the price to turn, a stop order expects it to keep going. So a buy limit sits below the price and a buy stop above it; a sell limit sits above and a sell stop below.
Triggers when the ask falls to 1.0820. Fills at 1.0820 or better.
Triggers when the ask rises to 1.0880. Fills at the next available price.
Triggers when the bid rises to 1.0880. Fills at 1.0880 or better.
Triggers when the bid falls to 1.0820. Fills at the next available price.
Buy orders trigger on the ask, sell orders on the bid; the charts show one price line for clarity.
Buy limit vs buy stop: what is the difference?
Both open a long position, but they expect opposite things. A buy limit at 1.0820 says: buy, but only after a dip. A buy stop at 1.0880 says: buy only if the price breaks higher. Most platforms reject a pending order on the wrong side of the price, such as a buy limit above the ask.
Limit orders: your price or better, but no guaranteed fill
A limit order fills at your price or better, never worse. But it may never fill: if the price turns one pip early, the move happens without you.
Stop orders: a fill once triggered, but no guaranteed price
When the price reaches a stop order, it becomes a market order and fills at the next available price: at or near your level in a calm market, several pips beyond it in a fast one. Some platforms, MetaTrader 5 among them, also offer stop limit orders, which place a limit order once the trigger price is reached: the price is capped, but the fill is not guaranteed.
Practise pending orders on a demo
A free demo uses live prices with virtual money. Set limits, stops and trailing stops and watch how they trigger, without risking anything.
Stop loss and take profit orders
A stop loss closes a position when the price moves against it by an amount decided in advance; a take profit closes it at the target. Both trigger automatically, even with the platform closed. A long has its stop loss below the entry and its take profit above; a short is the mirror image.
Stop loss below, take profit above. Both are triggered by the bid.
Stop loss above, take profit below. Both are triggered by the ask.
Why a short can be stopped out before the chart touches the level
Closing a trade means placing the opposite trade. A long closes with a sell, so its exits are triggered by the bid; a short closes with a buy, so its exits are triggered by the ask. Charts are usually drawn from the bid, so a short’s stop loss can trigger while the chart line is still below it: the ask sits one spread higher, and spreads can widen sharply around news and at the daily rollover.
How a stop loss and a take profit fill
A take profit works like a limit order: it fills at its level or better. A stop loss works like a stop order: once triggered it closes at the next available price, which in a fast market can be worse. It caps risk, but it is not a guaranteed exit price.
Many traders place the stop where the trade idea is proven wrong, such as beyond a recent swing high or low, then size the position so that distance costs a fixed share of the account, often 1–2% — see how to calculate position size.
How does a trailing stop work?
A trailing stop is a stop loss that follows the price at a fixed distance as the trade moves in your favour. When the price turns back, the stop stays where it is. It only ever moves one way: towards profit.
- 1Buy at 1.0850. The stop starts 30 pips below, at 1.0820.
- 2Price reaches 1.0880. The stop has followed it up to 1.0850, the entry price.
- 3Price peaks at 1.0900. The stop is now at 1.0870, about 20 pips in profit.
- 4Price falls back to 1.0870. The stop triggers and the trade closes near +20 pips.
Cyan: the price. Red: the trailing stop, pulled up by each new high.
The distance is the whole decision. Too tight, and normal noise closes the trade early; too wide, and it gives back much of the gain. Many traders base it on the pair’s typical range. In MetaTrader 5 the trailing stop runs in the terminal, not on the server, so it only moves while the platform is open; the last level it set stays on the server.
Slippage and gaps: when an order does not fill at your price
Slippage is the difference between the price expected and the price obtained. It affects orders that fill at the next available price — market orders, stop orders and stop losses — and is most likely when the price jumps: major releases, the weekly open, sudden headlines. It can also be positive, if the price moves your way before the fill.
What a weekend gap does to a stop loss
Forex closes on Friday evening and reopens on Sunday evening. If big news breaks in between, the first price can be far from Friday’s close — a gap. Nothing trades at the prices in between, so a stop inside the gap fills at the first price available.
For limit orders the same gap works the other way: a buy limit at 1.0820 would fill at about 1.0790, 30 pips better. Gaps hurt stops and help limits.
A standard stop loss does not guarantee the exit price. That is why many traders cut size or close positions before high-impact releases and weekends, and size each trade so that a stop filled beyond its level still does no serious damage.
Which order type to use: a quick reference
Where each order sits, what triggers it and how it fills, in one table:
| Order | Where it sits | Triggered by | Fills at | Typical use |
|---|---|---|---|---|
| Market buy / sell | Current price | Executes at once | Ask (buy) or bid (sell) | Get in or out now |
| Buy limit | Below the price | Ask falls to it | Your price or better | Buy a pullback |
| Sell limit | Above the price | Bid rises to it | Your price or better | Sell a bounce |
| Buy stop | Above the price | Ask rises to it | Next available price | Buy a breakout |
| Sell stop | Below the price | Bid falls to it | Next available price | Sell a breakdown |
| Stop loss | Long: below entry Short: above | Long: bid Short: ask | Next available price | Cap the loss |
| Take profit | Long: above entry Short: below | Long: bid Short: ask | Your price or better | Bank the target |
| Trailing stop | Behind the price | Long: bid Short: ask | Next available price | Protect open profit |
Most trades combine them: a market or pending order to get in, a stop loss and a take profit to get out. If bid, ask and pips are still new, what is forex trading covers them from the start.
Try every order type with live prices
TradeLocker and MetaTrader 5, raw spreads from −0.4 pips plus a commission per lot and a free demo to practise on first.
Key takeaways
- A market order buys at the ask or sells at the bid, now, and can slip in a fast market.
- Buy limit below the price, sell limit above: they fill at your price or better, if at all.
- Buy stop above the price, sell stop below: once triggered they fill at the next available price.
- Longs close on the bid and shorts on the ask, so a short’s stop can trigger when the spread widens.
- A stop loss caps risk in normal markets, but gaps and news spikes can fill it beyond its level.
Forex order types FAQs
What are the 4 types of pending orders in forex?
Buy limit, sell limit, buy stop and sell stop. Limit orders sit on the better side of the price, a buy limit below it and a sell limit above, and expect a turn. Stop orders sit on the breakout side, a buy stop above and a sell stop below, and expect the move to continue. Some platforms add stop limit orders.
What is the difference between a limit order and a stop order?
A limit order fills at your price or better, but may never fill. A stop order turns into a market order when its price is reached, so it fills even in a fast market, possibly at a worse price. Limits trade against the move, buying dips and selling rallies; stops trade with it, joining breakouts.
Is a stop loss a market order?
Once triggered, a standard stop loss becomes a market order and closes the position at the next available price. That is why it can fill beyond its level during news or after a weekend gap. A take profit behaves like a limit order instead, so it fills at its level or better.
Why was my stop loss hit when the chart never reached it?
Usually it is a short position and the spread. Charts are drawn from the bid, but a short closes at the ask, one spread higher. If the spread widened, around news or at the daily rollover, the ask can touch the stop while the bid on the chart stays below it.
Do pending orders expire?
They can. Most platforms offer good-till-cancelled, which keeps the order active until it is deleted, plus shorter expiries such as the end of the day or a chosen date and time. Until it triggers, a pending order can be modified or deleted at no cost.
Does a trailing stop work when the platform is closed?
It depends on the platform. In MetaTrader 5 the trailing stop is managed by the terminal, so it stops moving when the platform is closed or disconnected, while the stop loss it last set stays on the server and still triggers. Trailing stops managed on the server keep moving at all times.