A market order is an agreement to buy currency at a set exchange rate of your choosing, with the trade being processed if and when the rate is achieved. This provides you an exchange rate you are satisfied with and ensures you won’t have to monitor the market or worry about your currency exposure. Markers orders are ideal if you need to make a payment with no immediate urgency.
There are two types of market orders: stop loss orders and limit orders.
What is a limit order?
Limit orders are used when you wish to buy currency at a better value than the current exchange rate. This is best used when there is an upwards trend for your required currency and you believe it will continue. You are able to set an exchange rate stop on your desired rate, so that if it is achieved, your exchange will be automated and your purchase will be completed at that rate.
What is a stop loss order?
Stop orders are the opposite of limit orders in that they are used if you believe an upwards trend in the exchange rate will be reversed and that the rate will move against you. This helps limit your exposure to the currency markets and ensures you don’t suffer from a poorer exchange rate than expected.
What are OCO orders?
An OCO order (or One-Cancels-the-Other order) is a combination of both a limit order and a stop loss order. OCO orders place a targeted limit level above the current exchange rate, as well as a stop loss level below it.
OCO orders dictate that if the rate moves up to your desired limit, the trade will be triggered and your currency will be exchanged, removing and disregarding the lower stop loss level. Alternatively, if the rate moves downwards and hits your stop loss level, your trade will be made and your higher set limit will be ignored.
By using an OCO order, you can take advantage of any positive exchange rate movements, whilst protecting your foreign currency exposure.
Why would I need a market order?
The different types of market orders are all required for different purposes. For example, if the GBP to EUR exchange rate was 1.12, a limit order would allow you to target a higher rate, such as 1.15. If this rate and your target is achieved, your exchange will automatically be made.
Alternatively, a stop loss order would help you to protect yourself from a negative rate movement, by setting a stop limit for a lower rate such as 1.10. If the rate were to fall to that level, your exchange will again be automated at that point, regardless of whether the rate would continue to fall.
An OCO order is simply a combination of both. In this same example, if the rate were to fall to 1.10, your stop loss order would be activated and your payment made, disregarding your limit order. Vice versa, if the rate climbed to 1.15, your trade would again be made and would remove your stop loss order.
How can I agree a market order with moneycorp?
If you wish to secure a limit order, stop loss order or OCO order, these can all be agreed via our team of currency specialists. Your account manager can talk you through the process of agreeing a market order and can answer any questions or queries you may have.
Alternatively, we also offer a wider range of foreign exchange solutions for businesses.