In the (good) old days, when we had 2 phones, one to each ear, and shouted orders, Buy this, Sell that, there used to be more types of orders you could issue to your forex dealing desk – lots of conditionals, if this do that, if that, do the other… with the arrival of internet trading, these have slimmed down, but there are still some important variations on the standard order for a trade.

Do note – not all platforms offer all types of order as options – a good number don’t offer anything other than open and then close with a profit or loss.

GTC – Good til canceled
A GTC order remains active until you decide to cancel it… perhaps obviously. Your broker will not cancel the order at any time, (including at the end of a day’s trading). It’s your responsibility.

GFD – Good for the day
A GFD order remains active in the market until the end of the trading day. Because foreign exchange is a 24-hour market, this usually means 5pm EST since that that’s US markets close, but I’d recommend you double-check with your broker.

GTD - Good-til-date
Good-til-date order. Order good until the date specified by the trader. If not filled at the end of the specified date/session, will be eliminated.

Fill-and-kill
A FAK order is immediately filled in whole or in part at the specified price. Any remaining quantity is eliminated. Fill or kill, FOK, also exists.

OCO – Order cancels other
An OCO order is actually 2 orders… two limit orders, placed above and below the current price – if and when one order is executed, the other is canceled. It’s the classic method of staying in the game if you’re sure the price is going to trend but you’ve no idea whether up or down.

Rollovers and Rollover charges

If you hold a currency, you receive interest on your holding. If you borrow a currency, you have to pay interest on your borrowing.

So, because every forex trade involves borrowing one currency to buy another, interest rates are part of deal. Interest is paid on the borrowed currency, while you earn interest on the bought currency.

At the end of the day – and your broker’s cut-off time will vary – the daily rollover charges are calculated on your currency position at that moment. You’ll either pay or earn an amount from the difference in interest rates. (This additional profit/loss is the basis of the so-called carry trade – which is for a later lesson).

Forex brokers calculate rollover charges using different recipes – depending on the account type, the leverage involved etc. You do have to check the small print here. Of course, if you close all positions before the end of the day’s trading – no rollover charges.

Next, it’s 15. Traded Volumes →