Hi Deriv Community,
Market order (market execution), which you may see on your Deriv MT5 account, is generally the most used order type. It means buying or selling an asset at the current market price. Assets are bought at ASK price and are sold at the BID.
Thus, when placing a Buy order, it’s the Ask price to look at, and for a Sell order, it’s the Bid price.
Pending orders
Buy Limit
Buy Limit is a pending order which will be executed at a price specified by a trader or at a better price once this asking price is reached. This type of order is mainly used if you think the price will go up after falling to a certain point.
Example: Volatility 50 Index’s price – 193.1143/193.1363. Buy Limit is set at 193.0000 (Ask price). When the price goes down to this specified limit price, a Buy order for Volatility 50 Index will be placed.
Buy Stop
If you think the price will continue rising after reaching a certain level, you may go for this type of order. Buy Stop orders are placed above the current market price.
Such orders are used less often though it depends on your trading strategy.
Example: Volatility 50 Index’s price – 194.0884/194.1184. Buy Stop order is to be set at 195.0000, for example. When the price, which is on its upward track, gets to 195.000 (and not earlier), the order will be triggered.
Sell Limit
For such orders, a trader needs to set a price above the current one on the market – the so-called limit price. If you see that the price keeps going up but expect it to drop after reaching a certain point (your limit price), this is the order type to choose.
Mind that you take the Bid price into consideration.
Example: Volatility 50 Index’s price – 194.0884/194.1184. The Sell Limit price may be set at 196.0000. A Sell order is launched automatically once the Bid price hits this specified price.
Sell Stop
This Sell order is executed if an asset’s current price at the market is below a chosen limit. Such pending orders can only be placed below the current price level.
If you estimate that the price will continue decreasing after falling to a certain level, go for this order.
Example: Volatility 50 Index’s price – 193.1143/193.1363. The limit price will be 192.9000. Your order will be successfully triggered if the price drops to this level.
Stop-Limit Order
As its name implies, it has the features of both stop and limit orders. Once the asset price reaches the stop price, a limit order gets triggered, and thus, the asset is sold or bought at the desired price.
Let’s assume you want to buy Volatility 75 Index only if the market keeps an upward trend. The current price is 320,460. Thus, you set the stop price at 320,500 and the limit price at 320,600.
If the price breaks above 320,500, the order will become a limit order. In case the price stays below 320,600, the order can be executed. But if the price moves above 320,600, it will not.
For your pending orders, you may set the expiration date and time. Thus, if you schedule an order for expiration at 8:00 pm, it means that the server will delete the pending order if the price has not reached the specified level by 8:00 pm.
Please consider the time difference between the server time and your local time.
If a pending order isn’t yet triggered, it’s possible to delete it manually by clicking on the Close button:
So commonly used Stop Loss and Take Profit are also pending orders since you predetermine a certain level for the price to be reached. However, these orders are not used for opening a position but for closing it and are meant to manage risks.
When setting Stop Loss and Take Profit, remember whether it’s Buy or Sell order. For Buy orders, you should consider the Bid price since it’s closed at the Bid price. On the other hand, for Sell orders, it’s the Ask price you need to consider.
To conclude, all of the above orders can be used based on your trading strategy and are practiced depending on your prediction and market analysis.
If you have any questions, please visit our Help Centre or contact us via Live Chat and WhatsApp.
