Forex Academy:
Middle School
5 minutes
Lesson 3
What is the meaning of placing an order and closing an order?
- Predict price movements
- Initiate a trade order
- Close the trade order
So currently, you have downloaded the Meta Trader 4 application already, right?
If you look at the currency pairs, technical analysis videos and self-study materials,
you will see that you just need to buy low and sell high to earn a profit.
Buying low and selling high is indeed correct. However, there are specific terms used in Forex trading that are important to understand. Mastering these terms will help you grasp the knowledge you’ve learned better and move closer to making profits.
To simplify, the Forex trading process follows these steps:
1. Predict price movements
2. Initiate a trade order
3. Close the trade order
As I explain the trading process, I’ll also clarify the terminology used in Forex trading!
1. Predict price movements
Buying low and selling high means that you expect future prices to be higher than the current price, so you place a buy order and sell later.
So first of all, we have to “predict” whether the price will go up or down in the future.
Exclusively for customers who already have an account at Hirose, we will send market forecasts on our Telegram group 5 times a day on every weekdays.
First, let’s apply Hirose’s easy trading tips. You can see how to use the trading tips at the following link.
The “BUY” trend shows that the market price is expected to increase, so you should place a BUY order. The “SELL” trend shows that the market price is expected to decrease, so you should place a SELL order.
2. Initiate a trade order
First, choose a currency pair.
Hirose’s trading tips also mention currency pairs, so choose a currency pair on the trading platform.
For example, EUR/USD.
(Choose the currency pair EURUSD_uk, as you can only trade currency pairs ending in _uk)
For PC
Guideline about choosing currency pairs (for computers)
For phones (Android/iPhone)
Guideline about choosing currency pairs (for Android phones)
https://youtu.be/Z2RdDWZvn3Y
Once you predict how the price will move,
simply click “BUY” or “SELL” to start trading.
For phones (Android/iPhone)
Initiating a transaction by clicking “BUY” or “SELL” is called “placing an order”.
After placing an order, you will have a “Position”.
Holding a position is called “holding an order”.
You will hold a “BUY position” after placing a BUY order,
and hold a “SELL position” after placing a SELL order.
3. Close the trade order
When you place a BUY order, you predict that the price will increase from the current level. If the price indeed rises as anticipated, you will profit from the price difference.
Conversely, when you place a SELL order, you predict that the price will decrease from the current level. If the price does decrease, you will profit from the price difference.
Once you decide to close the trade, it is called “closing an order”. Initiating a trade is referred to as “placing an order”.
If you are holding a BUY order, the order will be closed at the SELL price.
If you are holding a SELL order, the order will be closed at the BUY price.
!! Important !!
You CANNOT close a BUY position by placing a new SELL order.
When you place a new SELL order, you will have a new SELL position.
Summary
Order: Initiates trading; includes BUY orders and SELL orders.
Position: Represents a placed trading order; includes BUY positions and SELL positions.
Hold: Refers to maintaining the position.
Close: Ends the placed trading order.
The lesson on ”What is the meaning of placing an order and closing an order?” ends here.
Let’s check to see if you understand the lesson!
In the next lesson, we will guide you about how to place a market order. Please continue to follow.
If you have any questions, please contact us.