Types of CFD Trading Orders

CFD Market Order

The CFD market order that refers to buying and selling CFDs as quickly as possible in the best market price that is currently available. In case of some providers, you will be allowed to place market order when the market is closed, and therefore will allow you to get in when the next trading session.

CFD limit order

The order under which you buy the CFDs during a time when the price trades at or below that limit price is called a CFD limit order to buy CFDs at a limit price. On the other hand, the order under which you sell the CFDs during a time when the price trades at or above that limit price is called a CFD limit order to sell CFDs at a limit price.

We use limit orders to enter or exit positions. For example, in order to enter a long CFD position, you can go for placing limit order to buy a CFD if the price trades at an exact price or lower. If you want to place these orders during evening, some platforms may permit you to place limit buy orders in that time at a price that is either beyond or under the last traded price. This means, you will be able to get into the market tomorrow if the CFD trades at or below that price.

However in some other case, you can exit a long CFD position with a limit order to sell CFDs. This is also knows as “take profit” order. Let’s assume that the price is $11.25 right at the moment and you are in the market with a long CFD position. You set a limit sell order at your profit target which is $11.75. Now if the price rises to or exceeds the $11.75 mark, you’ll be exited at your profit target. However, please keep in mind that the figures used here are only for illustration. This is neither a recommendation nor a part of any particular trading system.

CFD stop order

The order under which you buy the CFDs during a time when the price trades at or above that limit price is called a CFD stop order to buy CFDs at a stop price. On the other hand, the order under which you sell the CFDs during a time when the price trades at or below that limit price is called a CFD stop order to sell CFDs at a stop price.

Like limit orders, stop orders are also used for entering or exiting a position. If the trade goes against you, stop orders are usually used as “stop loss” orders to exit you from a trade. For example, assume that you have bought CFDs at a rate of $2.50 and the stop loss order is set at $2.25. Now due to the stop loss order, if the price of the CFDs falls to or below $2.25, you will sell the CFDs and will exit the position.

However, stop orders can be used for entering a position as well. For example, let’s say the current price of a CFD is $7.50 and you placed a stop buy order at $7.80. Now you will be taken into the market if the price rises up to and above $7.80. However, please keep in mind that the figures used here are only for illustration. This is neither a recommendation nor a part of any particular trading system.

If Done Orders

“If done” order is a particular type of order that will allow you to activate an order only after another order is filled. For instance, if you place a limit order to enter a CFD in the evening with a CFD broker who allows orders to be placed after the market is closed, in that case at the same time you may also want to place your stop loss order. However, until you actually enter the position you don’t want that stop loss order to be activated. This is when you can set up a limit order to enter a CFD-the one which is already places and waiting to be filled. After that you can place a stop loss order as well. However, it will be linked with the first order as an “if done order”.

Different CFD Providers May Execute Orders Differently

You need to keep in mind that not all CFD providers execute the orders in the same way. For instance, some providers might require that before your stop loss is filled a sufficient amount of underlying stock is traded at your stop loss. On the other hand, some providers might require only that the underlying stock was traded at the price to exit the CFD. Some providers also go for weighted average in case there is insufficient amount at a particular price level.

You need to check out the websites of the brokers to get detail information about their process of handling the orders. If you don’t find enough information in the site, then you can always call them or use email or online forms to directly contact with the CFD providers.

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