How to place different order types

The term “order” refers to how a trader will enter and exit their trader. There are a number of different order types that can be applied to a trade on MT4.

Market order

A market order is simply an order that is executed at the current market price, the moment you decide to buy or sell. You will be given the best available price at the time of execution.

In the example below, you can see a market order for EURUSD with a current “bid price” of 1.15534 and an “ask price” of 1.15543 on the MT4 platform.

If you wanted to buy EURUSD at the market price, then it would be sold to you at the ask price of 1.15543. If you click ‘Buy by Market’ your buy order trade would be instantly executed at that price.

How to create a market order in MT4

To create a market order, right click on an instrument in the “market watch” window and select “new trade” (or use the shortcut key by pressing F9 on your computer keyboard).

First, choose the symbol you wish to trade and the volume of your trade. In the “type” field, make sure “Market Execution” is chosen in the drop-down menu. You can attach stop loss and take profit orders to a market order, as well as a trailing stop (these are discussed in more detail below). Finally, either click “Sell by Market” or “Buy by Market” depending on the position you wish to take.

Stop Loss

Stop loss orders are potential protection against large losses if the market moves in the opposite direction of your trade. A stop loss order will remain active until the order is cancelled or the position is closed. Remember that you will need to factor in the chance of slippage on your order.

For example: If you open a buy position on the UK100 at an entry price of 7300. However, you don’t want to risk anything more than a 10 point loss. To limit your maximum loss, you would set a stop loss order 10 points lower than your entry price at 7290.

Take Profit

A take profit order can be added to your position, to ensure you lock in your profits before the trade has a chance to change direction. This is done by setting a predefined ‘take profit’ price.

For example, you go long (open a buy position) on the UK100 at an entry price of 7300. This time you would like to set an order to close your trade automatically when the market price hits a certain profit level. In this instance, you may set the take profit level at 7320.

How to place a Stop or Limit order on MT4

Setting stop and limit orders on MT4 is simple. To add these orders onto a new trade, you can right-click on the trading instrument in the Market watch window and click ‘New Order’. Alternatively, click on the chart of an instrument you wish to trade and press F9 on your computer keyboard. Once there you can adjust your stop loss and take profit levels.

Add or modify Stops or Limits to an existing position

To add or modify Stops and Limits at a later date, right click on the open position and click ‘Modify or Delete Order’. From here you can adjust the level of points you wish to set the Stop Loss and take profit from your entry price.

On MT4, the Stop Loss or Take Profit you set must differ from the market price by at least 20 points.

Pending Orders

A pending order is as described as an order set up and pending execution. It is essentially an instruction (‘order’) set by a trader to open or close a position when a certain ‘target price’ is reached. There are two types of pending orders available on MT4 - limit orders and stop orders. A limit order includes either a buy limit or sell limit. A stop order is either a buy stop or a sell stop.

Buy limit → an order to buy an asset at or below a specified price
Sell limit → an order to sell an asset at or above a specified price
Buy stop → an order to buy an asset above the current market price
Sell stop → an order to sell an asset below the current market price

Limit Entry Orders

A limit order is an instruction to either buy below the current market price or sell above the current market price at a certain predefined price set by the trader. For a buy limit, the instruction would be to execute the order at ‘X’ price or lower. A sell limit would be to execute the order at ‘X’ price or higher.

For example, let’s say EURUSD is currently trading at 1.1700, and you would like to go short (sell) if the price reaches 1.1720. You would set a sell limit order at 1.1720. An expiry date and time can also be added to the order if desired. Once set, this means that if the price of EURUSD goes up to 1.1720, MT4 will automatically execute a sell order at the best price available.

Stop Entry Orders

As well as using stops to close a position, you can also open new trades with them. These are called 'stop entry orders'.

A stop entry order is an instruction to either buy above the current market price or sell below the current market price at a certain predefined price set by the trader.

For example, let’s say USDJPY is currently trading at 110.20. You believe the price will continue to rise if it hits 110.30. If this is the case you would set a buy stop order at 110.30. Once set, this means that if the price of USDJPY hits 110.30 and continues to rise, MT4 will automatically execute your buy stop order at the best available price.

Good Till Cancelled & Good Till Date

There are also two different time settings you can apply to your pending orders - good till cancelled (GTC) and good till date (GTD).

Good till cancelled (GTC), means the pending order will remain on the system until it is either filled or cancelled. The order will remain active until that point. Good till date (GTD) is an order that remains active until a specified expiry date and time.

You can modify or cancel your pending order at any time, as long as the order has not been filled.

Trailing Stops

A trailing stop is a dynamic stop loss order that moves your stop loss level automatically as the market price of that instrument fluctuates.

For example, you open a sell position (short) for USDJPY at an entry price of 109.70. You then decide to set a trailing stop of 20 pips.

This means originally your stop loss would be placed at 109.90. However, if the market price goes down to say 109.50, then your trailing stop would move down to 109.70 (which would be breakeven as this was your entry price). If the price of USDJPY continues to move down to say 109.35, then your trailing stop would move to 109.55, essentially locking you in a 15 pip profit.

Remember, in this example your position would remain open until the market price moved against you by 20 pips. Once the trailing stop would be hit, an order would be executed to close out the existing position. To add a trailing stop on MT4, right click on your open position in the Terminal window and click ‘Trailing Stop’. You can then choose how many points you wish to set the trailing stop for. On MT4, the minimum trailing stop level you can set is 15 points. However, you are able to set a custom trailing stop level if you wish.

Example of a trade with entry, stop loss and take profit levels

Slippage

Remember, placing a normal stop loss does not 100% guarantee you will be filled at that particular market price. This is due to what is known as ‘slippage’. Slippage is the difference between the requested market price and the actual price that the trade was filled at. Slippage is based on two factors, liquidity and volatility. It can occur in fast-changing market conditions or in markets where there is a lack of liquidity.

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