Exiting with a Market Order. Exiting a trade with a market order means that you will sell at your brokers current "bid" price, or buy at your brokers current "ask" price, whatever that price currently is. For example, suppose you had purchased one lot of USDJPY, meaning you are long one lot. If you then assume that the current market is 127.51/55, you know that you can exit your existing long position at 127.51 (that is, sell it to close at 127.51).
On the GCI system, this is done by right clicking on the open position in the "Open Positions" window. You can then select "close position" from the pop up menu, enter the lot amount you wish to close, and click "OK".
Exiting with a Stop. Exiting a trade with a stop order means that your position will be closed after an adverse market move of a specified amount. This does not necessarily mean that you have incurred a loss on the trade (see "trailing stops" below). For example, if you had purchased 1 lot of USDJPY and it is now trading at 128.50/54, you could place a Stop at 128.20. This means that the order will only be filled if the market moves down to 128.20, limiting your loss to .30 (30 pips).
On the GCI system, you can place an order to exit a position on a Stop order by right-clicking on the position in the "Open Positions" window, and then selecting "Stop" from the pop up menu. You can then input the order size and price.
A Trailing Stop is placed in the same manner, but the concept here is that the stop will be moved as the market moves in your favor (the stop "trails" the market"). So for example, assume that you had placed your stop at 128.20 with a long USDJPY position at 128.50. If USDJPY moves up to 128.90, you could then move the stop up to 128.60. This would ensure a worse case of a gain of .10 (10 pips), while still allowing unlimited upside if USDJPY continues to rise.
The advantage of exiting with a Stop is that (1) you limit your downside to the amount you specify with your stop, and (2) you have unlimited upside in the event that the market continues to move in your favor. The disadvantage is that markets will occasionally move adversely initially, causing your stop to be filled and closing your position, and then proceed to move in the direction that you had originally anticipated.
Exiting with a Limit Order. Exiting a trade with a limit order is an effective way to ensure that you will capture profits once your profit target is reached.
On the GCI system, you can place an order to exit a position on a Limit order by right-clicking on the position in the "Open Positions" window, and then selecting "Limit" from the pop up menu. You can then input the order size and price.
The advantage of exiting a trade with a limit order is that your position will be successfully closed if your profit target is reached, even if only for a few seconds. For example, if you purchased USDJPY at 128.50 and placed a limit order to exit the trade at 129.50, you will successfully capture a 1.00 profit (100 pips) if 129.50 is reached even briefly and then the market falls again. The disadvantage is that you will limit your upside, foregoing additional gains if the market was to continue to move in your favor. Furthermore, you will not limit your downside if the market moves against you. For example, if the market rises to 132.00, your profit will still be limited to the 100 pips because your position was closed at 129.50. If the market moves down below 128.50, your losses will not be limited, unless you had also placed a stop on the open position (see "exiting with a Stop" above.
Using Stops and Limits Together. A common strategy is to place both a Stop and a Limit on the same open position. On the GCI system, the position will be closed by whichever order is reached first, and the other order will automatically be cancelled. This is known as "OCO" or "One Cancels the Other".
