Forex Academy:
Middle School
5 minutes
Lesson 4
How to place a market order
- What is a market order?
- How to place market orders on the MetaTrader 4 application?
- Advantages and disadvantages of market orders
What is a market order?
A market order is an order to buy or sell a currency pair at the current market price, executed immediately without specifying a predetermined price for an order to buy or sell a currency pair.
When you want to execute an order immediately at the current market price, you should use the market order method.
For example, if you predict that the market price will increase and you want to place a buy order
The current price is 1.13479.
When you want to place a buy order at the market price of 1.13479 right now, it means you will use a “market order” to place a BUY order at the price of 1.13479 US dollars.
You can place orders by yourself while monitoring the charts and currency pair exchange rates, so this is the easiest way to place orders, even if you are a beginner, you can easily use this method.
Next, let’s review the knowledge about the ASK price (buy price) and the BID price (sell price) that you learned in lesson 5 of primary school.
When you want to place a sell order, the order will be placed at the BID price (sell price).
When you want to place a buy order, the order will be placed at the ASK price (buy price).
The BID price (sell price) and the ASK price (buy price) are not the same – the ASK price (buy price) is slightly higher.
The difference between the ASK price ( buy price) and the BID price (sell price) is called the Spread.
The BID price (sell price) and the ASK price (buy price) are not the same – the ASK price (buy price) is slightly higher.
【Notes when looking at the chart and trading】 The MetaTrader 4 chart displays the Bid price (sell price).
“Sell Orders” will be placed at the price level shown on the chart. However,
“Buy Orders” will be placed at a slightly higher price level than the price displayed on the chart.
For example:
In addition to the chart, you can also check the ASK price (buy price) and the BID price (sell price) on the exchange rates table, so be sure to check the exchange rates table when you want to place a buy order.
When the chart shows the USDJPY price as 123.098, I have placed a buy order
The buy order was executed at the price level of 123.116 which is higher than the 123.098 price level.
This happens because the ASK price (the buy price) is higher than the BID price (the sell price) displayed on the chart.
The BID price (the sell price) is 123.098 as shown on the chart, but the ASK price (the buy price) is 123.116, which is higher than the BID price (the sell price).
When placing a buy order, be sure to set a line to show the ASK price (the buy price) on the chart.
You can set a line to show the ASK price (the buy price) on the MetaTrader 4 trading platform (for PC, Android, and iPhone).
After you set it up, the chart will display a line showing the ASK price (the buy price) like the image below
For Meta Trader 4 platform on PC devices
This video will guide you on how to set up the ASK line (the buy price) on MetaTrader 4 platform on PC devices
For Meta Trader 4 platform on Android devices
This video will guide you on how to set up the ASK line (the buy price) on MetaTrader 4 platform on Android devices
For Meta Trader 4 platform on iPhone devices
This video will guide you on how to set up the ASK line (the buy price) on MetaTrader 4 platform on iPhone devices
How to place market orders on the MetaTrader 4 application?
For Meta Trader 4 platform on PC devices
This video will guide you on how to place market orders on MetaTrader 4 platform on PC version
For Meta Trader 4 platform on Android devices
This video will guide you on how to place market orders on MetaTrader 4 platform on Android version.
Advantages and disadvantages of market orders
Advantages
You can place orders faster because you don’t need to set the price and time of the order.
If you want to open an order immediately to catch up with price trends or to close an order quickly, this method will help you execute it quickly as it requires fewer steps.
Since you don’t need to set the price and time of entry, you can place and close orders quickly.
Disadvantages
Since you don’t set the price, if the exchange rate changes at the time you place the order,
the order will be executed at the changed exchange rate.
Especially when the exchange rate fluctuates strongly, the executed rate is often different from the order price.
(The exchange rate is updated every 0.5 seconds)
Since the price is not specified, if the price fluctuates at the time the order is placed, the order will be executed at the changed price.
However, you can rest assured. At Hirose, we are continually enhancing our technical capabilities to execute orders faster (within a few milliseconds), aiming to minimize slippage
The lesson on “How to place a market order”ends here!
Let’s check to see if you understand the lesson!
In the next lesson, we will guide you about how to close a market order. Please continue to follow.
If you have any questions, please contact us.