{"id":340,"date":"2021-08-08T19:29:10","date_gmt":"2021-08-08T17:29:10","guid":{"rendered":"https:\/\/cfd-trading-blog.com\/?p=340"},"modified":"2021-10-23T14:11:32","modified_gmt":"2021-10-23T12:11:32","slug":"ordertypen-beim-cfd-trading","status":"publish","type":"post","link":"https:\/\/cfd-trading-blog.com\/en\/cfd-education\/order-types-in-cfd-trading\/","title":{"rendered":"Order types in CFD trading"},"content":{"rendered":"
The order types in CFD trading do not really differ from the order types in normal stock trading. However, they are much more important in CFD trading and safe handling of them is very important. They are also part of a good risk management.<\/p>
In addition, it is now common to take advantage of computer trading and include order additions in CFD trading, which the CFD brokers' server automatically executes. However, one should be familiar with the order types, which at first glance seem a bit confusing. A market order is almost self-explanatory, and take-profit and stop-loss are also familiar to most people. However, the different types of limit orders and especially their use require thorough consideration for each trade. Even a trailing stop loss can cause damage if the investor uses it imprudently.<\/p>
What the individual order types mean is explained in the following article:<\/p>
The market order is immediately placed on the market and executed at the current price. However, this is only possible because no specific price has been set beforehand. In a liquid environment, the buy (ask) or sell (bid) prices can be realized immediately. It must be remembered, however, that the market order is always executed at the next best price. If there are only a few traders in the market, the purchase price can be very high and higher than initially thought.<\/p>
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With a limit order, the trader sets a clear price for his order. The execution can therefore only take place when the specified price has been reached. These order types are a special safeguard in CFD trading and are part of any CFD strategy. While with the market order only the next best price is possible, the prospective buyer defines with his limit exactly which price he will accept.<\/p>
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The Limit Buy order sets the maximum price at which the investor wants to enter the market. The limit buy order is a classic order type for long CFDs. As long as the price moves above the limit, no trading occurs. Only when the CFD reaches the maximum price or falls below it, the system gives the order to the market and the order is executed. With the limited buy order, the trader can be sure that the price of his investment will not be exceeded to his disadvantage and he will buy too expensive.<\/p>
Assuming the Dax is currently quoted at 15576. The trader expects rising prices, but does not expect good opportunities until the index has fallen to 15 500. For his buy order, he therefore selects a CFD on the Dax as a limit buy order and chooses 15500 as the limit. The broker only executes when the 15500 points are reached.<\/p>
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When selling a security, the limit sell order ensures that the price does not fall below a minimum. The limit sell order is a classic order type for opening a short CFD. However, it can also be used to close long CFDs. The sale will not be executed if the specified minimum price has not yet been reached. Namely, if the latter enters his price target as a limit sell in the order, he sells into the price movement according to his ideas.\u00a0<\/p>
Let's imagine that a CFD on Tesla was bought at the price of 600$. The investor expects the price to rise to 660$. So he enters his price target right when placing the order or as a change. Two days later, the paper reaches the price and the broker automatically implements the sale.<\/p>
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In volatile markets with their ups and downs, many want to make sure that they realize the potential gains. With a take profit, they specify the price up to which they want to follow the movement. The result is similar to a limit stop order. With a take profit, a fixed price is set at which the CFD is closed at a profit.<\/p>