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MetaTrader 5, or MT5, is a popular trading platform used to trade in various financial markets. In addition, it’s the improved version of MetaTrader 4 (MT4) since it has more features to enhance the user trading experience. When using this trading platform, the users issue requests and the brokers prepare the execution.
When it comes to the differences, there are various factors traders consider. One of these factors is the order types. As you know, there are more order types in MT5 than in MT4.
So, if you want to know the order types in MT5, their functions, and their importance, you should check the list below!
Market Orders
The market order is the most basic type of order in MetaTrader 5. It’s when a trader wants an immediate buying or selling of an asset at the current market price. However, although the goal is to buy an underlying asset at the current market price, it’s not always guaranteed since the market fluctuates frequently.
Slippage is the term used when there’s an expected trade price, but it’s different from the price when the trade is executed. When it comes to the timing of market orders, the order is executed right away. So whatever the price during the order execution, the client pays for it.
Pending Orders
A pending order, on the other hand, is when an MT5 user instructs the broker to buy or sell an asset in the future. The trader defines conditions that trading platforms need to achieve before executing a trade. The price also depends on the future, so the trader should always be aware of the amount of money in their MT5 accounts.
Meanwhile, pending orders are divided into two categories— limit orders and stop orders. However, a stop-limit order can also be implemented since it’s a combination of the two.
1. Limit Orders
From the term itself, limit orders allow users to set a maximum price at which they’re willing to buy or sell. This is a great risk management tactic since traders can control their entry and exit by determining specific price levels.
BUY LIMIT
When the current price of the trade the client wants is high, they place a buy limit. It’s when they place the price of the order lower than its current price. That way, when the price of the trade you’re interested in reaches the buy limit price you’ve set, it’ll be automatically executed.
SELL LIMIT
On the other hand, the traders can also set sell limit orders. It’s when a trade is set to sell at a price identified by the trader. Usually, this is done when the current price of the trade is lower than what’s anticipated by the trader who wants to sell.
But once the price level hits the same or higher than expected, that’s when the order is executed.
2. Stop Orders
A stop order or stop-loss order is when the order is triggered at the specified price and gets executed at the next price available. So usually, it’s not like finding the exact price that matches what the client specified. Instead, it’s triggered by a limit, and the order gets executed afterwards.
On the downside, compared to limit orders, stop orders tend to encounter slippage more often than not.
BUY STOP
Traders can use buy-stop orders when the price of a trade is anticipated to become higher. For instance, if the asking price is $10, and a trader places a buy-stop order at $15, the trade will automatically be executed at the next available price.
SELL STOP
Sell-stop orders are placed when the current price is expected to be lower. This will prevent the trader to sell the trader to execute the trade much lower than expected.
3. Stop-Limit Orders
Stop-limit order is the combination of a stop order and a limit order. It’s an option where the trader can have more control of the price levels of their trades.
When a trader places a stop-limit order, it’s executed when it’s triggered with the stop price and reaches or exceeds the limit price.
Final thoughts
As a beginner, it’s essential to know the various MetaTrader 5 order types for successful trading. Another good this is if you prefer other trading platforms, they usually also offer the same order types. Furthermore, whether you’re a beginner or a professional trader, these order types can significantly increase your trading experience.
