Market Orders
A market order is an order to buy or sell a specific currency, which is to be filled immediately at the currently quoted exchange rate. Under normal market conditions, market orders are executed within 2 to 5 seconds.

It is important to note that during extremely volatile market conditions, it is possible for a trader to get requoted. This means that when prices are moving rapidly, the price requested may have already changed by the time the order is received by the dealing desk. If this occurs, our dealing desk will immediately provide you with a new price. The trader can then choose to execute the order at this requoted price. Under no circumstances will a market order be filled at a price which the client has not approved.

At CMS Forex we understand that it can be frustrating to get requoted during a fast moving market. In order to minimize the chance of missing an important opportunity to enter or exit a position, we have introduced a feature called Trader’s Range. Trader’s range is a feature on the order screen of VT Trader that allows you to specify the maximum number of pips of deviation from the quoted price (in either direction) that you are willing to accept.

For example, if you place a market order to buy GBP/USD when the quoted price is 1.6864, and you specify a Trader’s Range of 5, that means that you are willing to accept a price anywhere between 1.6859 and 1.6869. If no Trader’s Range is specified, it is by default set to 0, meaning you are only willing to accept the quoted price. If the Trader’s Range is set to 0 and the market is moving very fast, then it is possible for you to get requoted on a particular currency price. Trader’s Range is an optional but very useful feature for those that want to avoid approving requotes during fast moving markets.

Limit and Stop Orders
Limit and stop orders are orders that are placed to close open positions at a particular price to lock in a gain or minimize a loss. These orders will remain in effect until the client cancels the existing order or the designated price is reached.

Limit orders are placed with the intent of securing a preferred rate for an existing position. The open position is closed when the pair's price reaches the trader's predetermined level. For a long position, a limit order is placed above the current price. If a trader holds a short position, then a limit order will be placed below the current price.

For example, you buy the GBP/USD pair at 1.8825. You can set a limit order right away that would automatically close your long position at a certain price if the price of the pair rises. In this example, a trader could set a limit 50 pips away from the current price, placing a limit order at 1.8875. A limit can also lock in a loss. How? As in the above example, let’s assume a trader buys the GBP/USD pair at 1.8825. After one day of market activity, the pair has moved against the trader and the price is now 1.8750, a floating loss of 75 pips. Remember that for a long position a limit order is placed above the current price. Therefore, the trader can set a limit order at 1.8800, so the position closes out if the market moves 50 points back in their favor.

A stop order is a tool that may be used to minimize losses. For a long position, a stop order is placed below the current price. If a trader holds a short position, then a stop order will be placed above the current price. Also known as a "stop-loss order", its purpose is to close out a position in which the market is moving against you, minimizing your losses on a trade.

For instance, if you own a long position of EUR/USD, which currently trades at 1.2727, and you place a stop order to sell it at 1.2700, your stop order will close the position once the pair drops to 1.2700.

A stop order can also be used to lock in gains on a positive position. For example, assume you bought the GBP/JPY pair at 224.30 and now the pair is trading at 226.30. Placing a stop order below the current price, let’s say at 226.00, will lock in a gain of approximately 170 pips for one lot.

The policy of CMS Forex is to honor all stop and limit orders for positions up to 10 lots, under normal market conditions. For positions greater than 10 lots, or during extraordinarily volatile market conditions, in which it may become impossible to execute such orders at their intended price, the next available price will be used to process the contingent order. In those cases, placing a stop or limit order will not necessarily limit your losses to the intended amounts. Also, please note that slippage may occur on stop and limit orders due to weekend price gaps.

Entry Orders
A third type of order is the entry limit/stop order. This type of order is executed the moment the market price reaches the client’s specified price. Unlike regular limit and stop orders that close out an existing position, entry buy or sell orders open a new position once the price reaches a certain level.

For example, if you want to buy GBP/USD, but not until the price drops to 1.6860, you would place an entry-limit buy order at 1.6860. If the price never drops to that level, then the order will remain unexecuted, but it will remain a pending order until you cancel it. If you want to wait until the price goes higher than the current price before buying a pair, the buy order name changes to an entry-stop buy order.

With VT Trader, it is easy to place entry buy or sell orders. Simply right click on any point on the graph, either above or below the current price and you are presented with a window to enter your order. Entry orders can be used as limit and stop orders for existing positions. If a trader is holding onto a long position and places an entry-limit sell order above the current price, when price reaches that level, the new short trade will work to automatically close the open position. 

Entry orders are subject to the same policy as stops and limits, meaning we honor the price set for the entry order for positions up to 10 lots, under normal market conditions. For larger positions, or during extraordinarily volatile market conditions, it may become impossible to execute the order at the intended price, and the next available price will be used to fill the market order.

Trading Terms

†CMS is compensated through the Bid/Ask spread.

‡For qualifying accounts only.