Home How to open and close a position?

How to open and close a position?

Positions in the Forex market can be opened by the implementation of market or instant orders and pending orders (in this case, there will be an automatic execution).

To open a position with the help of an order, you can use several methods:

  1. Go to the "Tools" menu and then select "New order";
  2. Go to the "Market Overview" and then double-click on the name of the currency pair;
  3. Click on the icon MetaTrader 4 on the toolbar;
  4. Press F9;
  5. Click on the command "New order" from the context menu of the window "Terminal - Trade";
  6. Click on the command "New order" from the context menu of the window "Market watch".

MetaTrader 4

Opening the position, you must fill in the following lines:

  • Symbol – from the drop-down list to choose the preferred currency pair.
  • Volume – specify the number of trading lots.
  • Stop Loss – this is optional. If this figure is zero, it means that a warrant is not installed.
  • Take Profit – this field is also not required to fill out. A zero figure means that the warrant is not installed.
  • Comment – an optional field. This string should contain 25 characters. The comment cannot be changed when the position is already opened.
  • The checkbox in the row of using the maximum deviation allows to include the deviation of the price (no check mark disables the prices deviation). The new value of price deviation will be calculated in case the broker will give the new exercise price. If the market price deviation will not be above the specified by the trader, the order will be executed automatically at the new price, or the broker will return the price at which the order will be executed.
  • Setting the maximum price deviation, you will indicate how it may change in points.

After all specifications and selections, a broker receives a signal about open long or short position. If you set the Stop Loss and Take Profit very close to the current price, you will see the entry "Invalid S/L or T/P" in the window. Afterwards, you need to move the levels farther from the current prices and request position opening.

As soon as the broker will perform the operation and put the indicators Stop Loss and Take Profit, you will find open trading position. On the tab "Terminal - Trade", you will be able to see the status of an open position in the special line. However, if you activate the option showing the trading levels you will be able to analyze the levels on the charts opened with Stop Loss and Take Profit.

MetaTrader 4

Types of orders

Traders can open market or pending order. Below we explain each of themin detail.

The difference between instant and market order is that the first is executed only at the requested price, and the second - at the current market price. The advantage of market orders is that the System performs the best average price available in the market at the time of execution.

A pending order can be of several types:

Stop order is triggered at the moment of achievement of a market price established as "stop price". Further, the order shall be treated as a market order. If the price has not been reached, and accordingly, the "stop order" did not pass, it will remain active in the system until a later date due to the broker. Stop orders on CFD, spot metals and futures are made with minimum deviation from the current market price.

The pending Stop Loss order is used to limit the losses of the trader. System execution is the same as for Stop orders – it is triggered when reaching a "Stop Loss price" and is already regarded as a market. Otherwise, the order will remain in the system. In the case of CFDs on FX, spot metals and futures "Stop Loss" is executed with minimal deviation from current market prices.

Another type of pending order is a Limit order. It will be executed once the market reaches a predetermined "limit price". At this point, the order triggered and executed at such price or better. In the case of non-performance of orders and contracts for difference, spot metals and futures – the situation is similar as in the previous orders.

Pending Take Profit order is used to lock in profits. As soon as the market has reached a "Take Profit price" the order is executed as a "limit order". In case of default orders and CFDs, spot metals and futures – the situation is similar as in the previous orders.

Good Till Cancel or "GTC" is used to set the time during which the client intends to execute a pending order. During this period the warrant remains in force, and after that needs to be removed. However, MT4 allows you to change or cancel a pending order that can be used if the market price never reaches the expected levels.

Requotes are provided to the client if the asking price for the execution of the instant warrant is not available in the market. In fact, it is the next available price received by the broker from liquidity providers.

Slippage happens when order that is requested by the client is executed at the close price, or with minimal deviation from it. It can happen, when the asking price is not available on the market. The client can "get" a positive or negative slippage, when the execution price is better or worse than interest. It is worth saying that this operation is a normal market practice.

Closing positions

Closure allows to fix the profit, so traders from all over the world strive to find the broker who closes the deal as quickly as possible. Scheme is that: when opening a position You are buying one lot of a particular instrument, and when closing You have to sell a lot of this same tool.

Working in the terminal Metatrader4 You have the opportunity to close the position in several ways.

Closing a position - the most common option - is done automatically if the price exactly corresponds to the Take Profit or Stop Loss (we wrote about that above). When you close a long position, the value of orders should be at the level of the Bid price, a short – at the level of the Ask price. For the manual removal of a single position, you can use the context menu of the window "Terminal - Trade" or make a double click with the left mouse button on an open position. By all of that a single position can be closed by the broker if, for example, the price reaches the established level of "Stop Out".

MetaTrader 4

One more way: you can use the closing of counter line items. The counter line items are those, that are the opposite to the same currency pair. If you want to close a specific position, and having among open positions you the counter line, they can be closed together. To do this, open the "Order" window in the row "Type" and specify that you want to close the position. Then at the bottom You will see all the counter positions. Selecting the needed one will activate the "Close" button and You will be able to remove two positions. If one of the positions will contain more lots than the second, it will remain available and will accommodate the number of lots equal to the difference between the previous positions.

If you want to close a couple of positions of the same financial instrument, you can use the MT4 with the closing of several counter line items. To conduct this operation, it is also necessary to refer to the "Order" window in the row "Type" to specify the corresponding menu item.

Further you will see positions that can be closed. They are removed in pairs. If the opposite positions are not the same in volume, a new position is automatically opened with this difference. This remaining position will also participate in a subsequent closing process. This trend will continue until all positions are closed or one final will be opened.