In practical terms, FX orders consist of a series of instructions that stipulate to an FX dealer how (and often when) you would like to purchase a foreign currency.
Market orders are among the most basic type of FX orders: they open a position at the current price in order to achieve the quickest execution. As such, they are the best option when the primary objective is to buy foreign currency as quickly as possible. More advanced FX orders, however, allow you to buy currency at your chosen exchange rate, with the trade being processed if or when the rate has been met. This means that you receive an exchange rate with which you are happy, and it also means that there’s no need to monitor the market or worry about your currency exposure.
Most FX orders are ideal if there is no urgent need for you to make a payment. There are three types of orders that we offer: limit orders, stop loss orders, and OCO orders.
What is a limit order?
FX limit orders are used to purchase currency at a better price than the current exchange rate allows. They are the best option when your currency is on an upward trajectory, and you believe that it will continue to rise. You can set an exchange rate at which you are prepared to buy, so that once it has been reached, your exchange will go through, and your purchase will be made.
What is a stop loss order?
Stop loss orders can be thought of as the opposite of limit orders: you should use them if you believe that there will be a reversal in the exchange rate’s upwards trend and that the rate will move against you. Stop loss orders are used to limit your exposure to such movements in the currency markets and help ensures that you don’t suffer from unfavourable exchange rate shifts.
What is an OCO order?
OCO orders (or One-Cancels-the-Other orders) combine limit orders with stop loss orders. OCO orders stipulate a targeted limit level above the current exchange rate, in addition to a stop loss level below it.
In the event that the exchange rate moves up to your desired limit, the trade will be triggered, and your currency will be exchanged; the lower stop loss level will be discarded. Alternatively, if the rate instead takes a downwards turn and reaches your stop loss level, your trade will be made at this level and your higher set limit will be disregarded.
OCO orders allow you to take advantage of positive exchange rate movements whilst also allowing you to protect your business from foreign currency exposure.
Why would I need an FX order?
As we have seen, the various types of FX orders cover a variety of business needs and circumstances. Let’s say that you opt for a limit order. If the GBP to EUR exchange rate were 1.12, you would have the ability to aim for a higher rate, such as 1.15. Were this rate to be met and your target achieved, your exchange would automatically be made.
Using stop loss order, on the other hand, would grant you protection from negative rate movements: you would be able to set a stop limit at a lower rate (1.10, say). If the rate were to fall as low as 1.10, your exchange will be made at that price level, offering you protection from further falls in the value of the exchange rate.
OCO orders combine elements of limit orders and stop loss orders. If the exchange rate were to fall to 1.10, your stop loss order would be activated and your payment made, eliminating your limit order. Equally, if the rate were to climb to the 1.15 level, your trade would be executed and thus remove your stop loss order from the equation.
How can I make an FX order with Moneycorp?
If you would like to buy foreign currencies through the use of limit orders, stop loss orders or OCO orders, our team of currency specialists would be more than happy to help you. One of our Relationship Managers can talk you through the process of executing FX orders and will answer any questions that you might have about the process.
There are a range of alternatives to FX orders that you can choose from; these include forward contracts, spot contracts and a variety of FX options. These solutions allow businesses to agree to buy and sell currency at specified prices on predefined dates, thus protecting them from the downside risk incurred by unfavourable fluctuations in currency rates.
Lock in the present exchange rate for up to two years with a forward contract. Eliminates downside risk and give your business the certainty that it needs moving forward with regard to expenses and budgeting.
At Moneycorp, we bring more than 40 years’ expertise of trading in currencies and managing exchange rate risk. Using our low-fee services for your FX orders – whether you’d like to use FX limit orders, stop loss orders or OCO orders - means that you will be able to purchase more than 120 currencies, gain access to our dedicated team of currency experts and use a multi-currency bank account that combines the latest foreign exchange rates with information regarding all of your past payments.
Our foreign exchange solutions for your business
To find out more about our foreign exchange and global payment solutions for businesses, you can view our brochure.
*Forward Contracts may or may not require a deposit dependent upon your facility agreement.
**Our team of experienced currency risk management specialists are approved by the FCA for investment business. Following an initial assessment of your risk-appetite and investment objectives they can formulate and illustrate a bespoke solution for you to consider. Please note that Option related products are regulated investment products which can carry a higher level of risk than Forward Contracts.
None of the information contained in this website constitutes, nor should be construed as financial advice. Indicative rates are displayed on our website. We use interbank rates as a reference, and these rates should only be used as a guide.
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