Executing a Trade

It’s trigger-pulling time, partner. I assume you've signed up for a practice or practice account at an online forex broker and you’re ready to start executing some practice trades. Getting a feel for executing deals now, before you’re ready to commit any real money to a trade, will be very helpful. I you have not sign up with one, check my suggestion list here. 

There are two main ways of executing trades in the FX market: live trades and orders. If you’re an adrenaline junkie, don't focus only on the “Live dealing” section - the “Orders” section gives you plenty of juice to keep you going, too.

Trading online

Live dealing is how you access the market to buy or sell at current market rates. Knowing exactly what you want to do is important, because when you make a live deal, it’s a done deal. If you make a mistake, you'll have to make another trade to correct your erroneous trade, and that is very likely going to cost you real money. There are a few different avenues to get to the market depending on how your broker is set up.

Clicking and dealing

Most forex brokers provide live streaming prices that you can deal on with a simple click of your computer mouse. On those platforms, to execute a trade:

1. Specify the amount of the trade you want to make.
2. Click on the Buy or Sell_button to execute the trade you want.

The forex trading platform will respond back, usually within a second or two, to let you know whether the trade went through:

·     If the trade went through, you’ll see the trade and your new position appear in your platform’s list of trades. _

·         If the trade failed because of a price change, you need to start , again from the top.

·         If the trade failed because the trade was too large based on your margin, you need to reduce the size of the trade.

When the trade goes through, you have a position in the market and you’ll see your unrealized P&L begin updating according to market price fluctuations. .

Click-and-deal platforms usually have a number of shortcuts to enable more rapid trading. Some of these are for more advanced or active traders, so be sure you know what they are before you engage them. Here are the parameters that you can usually set up in advance: 

• Preset trade amounts: These are so you don't have to specify the amount each time you make a deal. .
• Automatic stop-loss orders at a predetermined distance. from the trade-entry price: These automatic stop-loss functions can be turned on or off, and you define the number of pips away for the stop loss. These functions are good for providing fail-safe stop-loss protection until you can enter a more detailed order for your trade strategy. Remember: You never know when a headline will roil the market, and you don’t want to get caught with your pants down.
• Square buttons: These will appear next to all open positions. By clicking on them, you’ll automatically square up (close) the open position you’ve is selected (assuming the position size is within the maximum per-trade deal size).

Some online brokers advertise narrower trading spreads as a way to attract traders. If your click-and-deal trade attempts frequently fail, and the platform then asks if you’d like to make the trade at a worse price, you‘re probably being re-quoted. Re-quoting is when brokers offer you a worse price to make your trade, meaning you end up paying a larger spread than you bargained for.

Phone dealing 

Placing live trades over the phone is available from most online forex brokers. You need to find out from your broker whether it offers this service and exactly what its procedures are before you can be ready to use it.

The ability to make trades over the phone is critical if you’re frequently trading while away from your computer or in cases of technological disruptions. At the minimum, you need to have the dealing phone number memorized and a reliable phone connection in case something goes wrong with your computer or Internet connection. If your dog chews through your mouse cable or your kid spills a sippy cup or juice on your keyboard, you’ll need a fallback plan to protect your market exposure.

To place a trade over the phone, you’ll need to:

1. Call the telephone number at your broker for placing a trade.

2. When you’re connected to a representative, identify yourself by name and give your trading account number.

Be ready to provide whatever account password is needed. (Knowing what’s required before you call to place the trade is a good idea.)

Know what your position is. If you’re not sure, your broker will be able to give you this info, but be prepared for time delays.

3. Ask what the current price is for the currency pair you’re trading. The broker’s representative will quote you a two-way bid/offer price, such as “EUR/USD is trading at 1.3213/15.

4. If you don’t want the price, say, “No, thank you.”

5. If you want the price, specify exactly what trade you would like to make.

Don’t just say “Close my position” or “Square me up.” Note the direction (buy or sell), the amount (don’t use lots - use the real amounts), and the currency pair. For example, “I would like to sell 140,000 EUR/USD.”

The broker should then say, “Done” or “That’s agreed.”

6. Confirm with your broker exactly what trade you just made.

For example, say, “To confirm, l just sold 140,000 EUR/USD at 1.3213.”

Be sure the broker confirms the trade. You can double-check that the trade was correct by asking the broker to input the trade and update your position.

7. Get the name of the broker’s representative you just made the trade with in case you have to call back.