Forex Trading Forex Trading Orders and Execution

Question 1

What is a 'market order' in Forex trading?

Accepted Answer

An instruction to execute a trade immediately at the current market price

Answer

A market order instructs the broker to execute the trade immediately at the best available current price, guaranteeing execution but not price.

Question 2

What is a 'limit order' in Forex?

Accepted Answer

An order to buy or sell at a specific price or better

Answer

A limit order is set to execute only at a specified price or better, allowing traders to enter or exit the market at a desired price level.

Question 3

What is a 'stop-loss order' designed to do?

Accepted Answer

Automatically close a losing trade at a pre-set price to limit losses

Answer

A stop-loss order automatically closes a trade when the price reaches a specified level, limiting the trader's maximum loss on the position.

Question 4

What is a 'take-profit order'?

Accepted Answer

An order that closes a trade automatically when a profit target is reached

Answer

A take-profit order automatically closes a position once the price reaches the trader's profit target, locking in gains without manual intervention.

Question 5

What is a 'trailing stop' order?

Accepted Answer

A stop-loss that moves with the market price to protect profits

Answer

A trailing stop moves in the direction of a profitable trade by a set distance, locking in gains as the price advances while still limiting downside.

Forex Trading Practice Test