Glossary of Terms for Chapter

The following lists the more popular orders used in both the foreign exchange and the futures market. Although the two markets share common orders, some are only relevant for the futures market, for example 'market on opening'. Hence, it is very important to state exactly and clearly what the order is and what, if necessary, you are trying to achieve.

Fill or kill (FOK) This is used by clients wishing an immediate fill, but at a specified price.

If the price is not attainable, the order is 'killed'. Limit order This is an order to buy or sell at a designated price. Limit orders to buy are placed below the market while limit orders to sell are placed above the market. Market if touched (MIT) This is the opposite of a stop order. A buy MIT is placed below the market and a sell MIT is placed above the market. It is normally used to enter the market or initiate a trade. It becomes a market order once the limit price is touched or passed through. An execution may be at, above or below the originally specified price. Market on close This order will be filled during the final seconds of trading at whatever price is available.

Market on opening This is an order that the client wishes the trader to executed during the opening of trading at the best possible price obtainable within the opening range. Market order The market order is executed at the best possible price obtainable at the time the order reaches the trader. One cancels the other (OCO) This is a combination of two orders written on one order ticket. Once one side of the order is filled, the remaining side of the order should be cancelled. This type of order eliminates the possibility of a double fill by having both orders on one ticket. Spread The client wishes to take a simultaneous long and short position in an attempt to profit via the price differential or 'spread' between two prices. Stop close only The stop price on a stop close only will only be triggered if the market touches the stop during the close of trading. Stop limit This order lists two prices and is an attempt to gain more control over the price at which the stop is filled. The first part of the order is written like a stop order. The second part of the order specifies a limit price. This indicates that once the stop is triggered, you do not wish to be filled beyond the limit price. Stop order A buy stop order is placed above the market and a sell stop order is placed below the market. Once the price is touched, the order is treated like a market order and will be filled at the best possible price.

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