The method of order placement in MetaTrader 5 for Forex and the skill of order placement are among the most fundamental and critical skills that every trader, regardless of their skill level, must master. According to research conducted from reputable sources such as B2Broker, FP Markets, and Bybit, it can be concluded that the level of skill and quality in order placement directly impacts the profitability of trades, risk control, and the discipline of trading strategies.
Basic and Essential Concepts in Order Placement
Explanation of Key Concepts in Order Placement:
Market Order
An order that is executed immediately at the current market price.
For example, if you want to enter a buy trade for gold without delay, you place a Market Order, and MetaTrader will automatically execute the trade at the best available price.
Pending Order
An order that is not executed immediately and waits for the market to reach a specified price.
For instance, if gold is currently at $2300, you place a buy order at $2280, so that the trade is activated only if the market reaches that price.
Limit Order
A type of pending order that is set for buying at a lower price or selling at a higher price than the current market price.
For example, if Bitcoin is at $60,000, and you want to buy it at $59,000, you would use a Limit Order.
Stop Order
An order that becomes active when the price exceeds a specified level. It is typically used for market entry in the direction of a breakout.
For instance, if you believe that gold will begin an uptrend after breaking through $2350, you would place a buy order above that price.
Stop Loss
An order that automatically closes the trade when the price reaches a specific level to prevent further losses.
For example, if you have opened a buy trade at $2300, you can set a Stop Loss at $2280, so if the price drops, the trade is closed, limiting your loss.
Take Profit
An order to close the trade at a point where you have reached a specific profit.
If you bought at the price of 1.0500 and want to exit the market at 1.0600, you set a Take Profit at that level.
Trade Volume (Lot Size)
It determines the size of each trade and specifies how much profit or loss you make with each pip movement in the market.
For example, with a 0.1 lot size, each pip change in price will result in approximately 1 dollar of profit or loss.
Leverage
Leverage is a tool that allows you to trade with a larger amount of capital than your actual balance.
For example, with 100 dollars and a leverage of 1:100, you can execute a trade worth 10,000 dollars; however, you should note that the risk also increases proportionally.
Spread
The difference between the ask price (buy price) and the bid price (sell price), which typically acts as the hidden cost of the trade.
For instance, if the buy price of the euro is 1.0500 and the sell price is 1.0498, the spread is 2 pips.
Equity vs Balance
Balance is the amount in your account without considering any open trades, while equity includes the profit or loss from current open trades.
For example, if your balance is 500 dollars and you have an open trade with a profit of 50 dollars, your equity would be 550 dollars.
Margin
The amount of money that is blocked by the broker to open a trade, ensuring that your trade is maintained in the system.
If you wish to open a high volume trade, part of your capital is set aside as margin and cannot be used for other purposes.
Free Margin
The remaining funds in your account are not tied up in any open trades and can be used for new trades.
For example, if 100 dollars of margin is used and your equity is 500 dollars, your free margin would be 400 dollars.
Margin Level
It is the ratio of equity to margin, displayed as a percentage, and indicates the status of your account in terms of whether it is at risk or not.
If the margin level drops below 100%, you may enter a risky situation, and the broker may close some of your positions.
Slippage
This occurs when your order is executed at a price different from the one you selected.
This typically happens in volatile markets; for example, you place a buy order at 2300, but it is executed at 2305.
One Click Trading
It is a tool that allows you to open or close a trade with a single click instantly.
This feature is very useful for fast trades, such as scalping, and reduces execution time.
Step by Step Guide on How to Place Orders in MetaTrader 5 Forex (MT5)
Guide on how to set orders in MT5:
Step 1: Logging into MetaTrader 5 Account
The first step to start trading is logging into your MetaTrader 5 account. You can do this by entering your account ID and password in the login window.
Step 2: Selecting the Trading Symbol
After logging into your account in MetaTrader, the next step is to select the trading symbols. To start, go to the Market Watch section, where you can choose from various Forex symbols such as EUR/USD, XAU/USD, and more.
Selecting a trading symbol is generally based on market analysis, current trends, and the trader’s preferences. Some traders choose currency pairs with the highest liquidity, like EUR/USD or USD/JPY. Other traders may focus on commodities (such as gold and oil) or market indices (such as Dow Jones). Additionally, some traders specialize in cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH). The selection of trading symbols should be based on the trading strategy, trade volume, and technical or fundamental analysis.
Step 3: Selecting the Order Type
In MetaTrader 5, there are several different order types that you can use.
Traders can use different types of orders, with the most popular being Market Order, Limit Order, Stop Loss, Take Profit, and Trailing Stop (to lock in profits during market fluctuations). These orders are highly popular among traders due to their ease of use and ability to help manage risk.
Step 4: Setting the Trade Volume (Lot Size)
Trade volume in the Forex market is typically calculated based on the concept of a “lot,” and you can select your desired volume from various options.
Step 5: Setting Stop Loss and Take Profit Levels
In this step, you need to set your stop loss and take profit levels. Determining these levels helps you prevent large losses and lock in profits at specified levels.
For example, let’s say the current price of EUR/USD is 1.2000, and you want to set the stop loss at 1.1950 and take profit at 1.2100. This means that if the price reaches 1.1950, your position will automatically close to limit your loss. On the other hand, if the price reaches 1.2100, your profit will be locked in.
Step 6: Reviewing and Submitting Orders
In this step, you need to carefully review all your parameters and order details to ensure everything is calibrated correctly. Once you are confident that everything is accurate, click on the “Order” button to place your order.
Step 7: Tracking the Order
After placing the order, it’s time to monitor its status in the “Trade” section. In this section, you can track the details of your transactions, including trade volume, profit and loss amounts, and the current status of your order.
Step 8: Editing or Canceling the Current Order
Sometimes, after submitting an order and tracking its status in the “Trade” section, you may feel that your order needs to be modified or even canceled. To do this, right click on your order in the “Trade” section and select either “Modify” or “Close” to edit or cancel the order.
Important Points for Success in Order Placement
Understand the types of orders:
Each of the orders introduced to you in Step 3 has its own unique features and behaviors. Therefore, before choosing any of them, it is better to have a good and general understanding of them and select an order that suits your trading style.Learn Risk Management:
Practice risk management and take the use of Stop Loss and Take Profit settings seriously to avoid significant losses and preserve the profits you have gained.
Trade Volume:
One of the most important and influential factors in determining profit and loss, especially for beginner traders, is a complete understanding of trade volume. Therefore, it is advisable to trade with small volumes until you gain sufficient mastery of this concept.