How boring would it be to go to an ice cream shop and discover all they offer is vanilla ice cream? Sure, if you are a fan of vanilla it would make for a great day but what about those of us who like chocolate? Forex trading is a little bit like the ice cream store with several different flavors to choose from. Only in Forex we are talking about the various kinds of trades you can make. Pretty nifty comparison, hey? Okay, let’s look at some of the exotic types of trades.
Good For The Day (GFD)
This is a trade that has a limited lifespan. Essentially it is active only to the end of the trading day. But isn’t Forex open all day and all night? Well, that is true but a GFD trade will have a time limit and typically it is 5:00 PM EST to coincide with the US Markets. But to be sure, get the expiry time from your broker.
This may be a bit complicated to explain. First, this trade order is actually a combination of two other types of orders. The combo an OCO order is made up of is two entry and/or stop loss orders. How this works is that the two orders with difference prices and durations are placed above and below the current currency pair price. Once one of the orders is executed it in effect kills the other order. In other words, one order gets executed when the other is executed. Maybe you’ll get the joke if we said it this way: One order is killed off when the other one is executed. Either way, still funny to us and an unusual trade strategy.
If you truly understood what an OCO order is, then you’ll be able to grasp the fact that an OTO order is the opposite of the OCO. Got that? What happens is the order only takes place after the parent order is triggered.
So, What’s The Big Deal About Forex?
It goes back to our ice cream shop example. When you have some interesting options available it makes the whole idea of participating in the program that much more interesting. If there was only one kind of trade that you could make in Forex, and everyone else had the one option, it would not be long before Forex trading was considered boring and everyone would move on to something else. With a vast variety of trading options, you have a lot of potential ways to build a good trading strategy. Plus, the different kinds of trades will also teach you something new about currency pairs. Sure, you could just eat vanilla ice cream all the time but sooner or later the chocolate fans would get to you and you’d want to experiment a little to see what all the fuss was about. Forex is kind of like that. Some fuss but a lot of interesting ways to achieve personal goals.