Stop and Limit Orders are orders which are tied to an open position, or order and set to automatically close a position when the market reaches a specified rate.  Normally a stop order is used to automatically close an open position before additional losses are incurred and a limit order is used to automatically lock in trading profits. 

If a position is opened by buying a currency pair, the stop order will always be placed below the current market price, and a limit order will always be placed above the current market price.  If a position is opened by selling, the stop order will always be placed above the current market price and the limit order will always be placed below the current market price. 

It is important to note that if a position is opened by buying, then your position will be closed when the “sell” rate reaches your stop or limit price.  Conversely, if a position is opened by selling, then your position will be closed when the “buy” rate reaches your stop or limit price. 

Example:

A trader has a buy position in EUR/USD which was opened at 1.2754 and the current market price is 1.2750.  The trader wishes to have this position automatically closed at a loss if the sell price reaches 1.2700 or automatically closed for a profit if the sell price reaches 1.2800.  To have this occur the trader sets a stop order on their open position at the rate of 1.2700 and a limit order on their open position at the rate of 1.2800.

To place a stop or limit on an open position left click under  the “stop” or “limit” column  in
the open position window for  the position you wish to add a stop or limit to as shown below:

After left clicking in the “stop” or “limit” column of the open positions window the stop/limit order box will appear.  On the stop/limit order box there are three parameters which can be set prior to sending an order to the trading desk.

• Select the specific ticket number (as shown in the open positions window) of the trade where the stop or limit will be placed.
• Select either a stop or limit order
• Select the exchange rate at which the stop or limit should be triggered.*
• Click on the “New” button after all the selections have been made to place the stop/limit order.
• Click the advanced button to place a trailing stop. (Trailing stops are explained on Trailing Stops page)

* Stop/Limit orders must be at least 1 pip above the spread of the current
market price.

Right-click on the appropriate stop or limit box from the highlighted ticket and select the “Stop/Limit” command from the pop-up menu.

Click on the “Trading” heading located on the top of the screen and select “Open Positions” and then “Stop/Limit.”

Click on the “Stop/Limit” button at the top of the trading screen

To modify the rate for a specific stop or limit order, simply click on the stop or limit column (as outlined above) which will bring up the stop/order window and allow the rate to be changed. If you wish to delete the order simply click on the “delete” button in the stop/limit order window.

In addition to adding stops or limits to open positions, the FXCM Trading Station also allows you to add a stop or limit to an entry order. Unlike stop and limit orders of open positions, stop and limit orders added to entry orders only become active after the market price reaches the entry order rate and your entry order becomes an open position.

Example:

Let’s say the current market price in EUR/USD is 1.2800. A trader wants to enter a long position if the market reaches 1.2850 so he places an Entry Order to Buy EUR/USD at 1.2850

The trader then wishes to place a stop order for this trade at1.2815 and a limit order to take your profit if the market reaches 1.2900. To make this happen he places a stop order on his entry order at the rate of 1.2815 and a limit order at 1.2900. If the market does not reach 1.2850 then his stop and limit orders will remain inactive. If the market reaches his entry order price of 1.2850 then his entry order will be executed and move down to the Open Positions Window and the stop order at 1.2815 and limit order at 1.2900 will become active.

To add a stop or limit to an entry order left click on the stop or limit column of the “orders” window.