A limit order is a type of order used in stable trading to place a trade instruction at a specific price level.
A Buy Limit order must have a price lower than the current market price. This type of order is typically used when anticipating a price drop followed by an upward movement. When the market price reaches or falls below the specified price, the Buy Limit order is triggered and executed.
- For example
Let's say the current market price of EUR/USD is 1.1000, and you anticipate a price drop to 1.0900 followed by an upward movement. You can place a Buy Limit order with a price of 1.0900. When the market price reaches or falls below 1.0900, your Buy Limit order will be triggered and executed.
A Sell Limit order must have a price higher than the current market price. This type of order is typically used when anticipating a price increase followed by a downward movement. When the market price reaches or exceeds the specified price, the Sell Limit order is triggered and executed.
- For example
Let's say the current market price of EUR/USD is 1.1000, and you anticipate a price increase to 1.1200 followed by a downward movement. You can place a Sell Limit order with a price of 1.1200. When the market price reaches or exceeds 1.1200, your Sell Limit order will be triggered and executed.
Please note that the actual execution price may have slight deviations due to market volatility. It is recommended to carefully review the order details and formulate appropriate limit order strategies based on market conditions and risk tolerance before confirming the trade.