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Chapter 5, Part V. Order types in FOREX Page 9

Discussion in 'Complete Trading Education- Forex Military School' started by Sive Morten, Dec 15, 2013.

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  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    1. First, about execution of Limit, T/P and any limit orders, that could be a part of some compound order (OTO, OCO). The advantage of Limit orders is that it never could be executed at worse price, than you specified. For instance, you place Limit Buy on EUR/USD at 1.3210. You will never buy EUR/USD due to this order higher, than 1.3210 – not at 1.3220, 1.3215 or even 1.3211. Only at 1.3210 or lower, i.e. better. Here you can ask – how it possible to Buy at better price? For example, due to some important unexpected World event price jump over your limit order. I mean, that price before the event was 1.3220 and after event 1.3150 for 1 single tick (tick is a trade). Other words speaking – there were no trades between these two, and hence quotes are also has changed abruptly. Before event was calm quote floating around 1.3220 and just after even quotes jumped to 1.3150 area. So, your order stands in between them. In fact, broker has to execute your order at first quote, that is not worse than 1.3210 – your specified order level. I suppose that you will be executed somewhere around 1.3150-1.3160 area. This possible quote jumping calls Slippage.
     
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