CFD Trading Order Types: Learn About Order Types That You Can Trade With CFD Brokers

Here is a list of the definitions of CFD order types that are related to CFDs, and discussion on how some CFD brokers or providers fill these orders differently from others.

CFD market order

A market order is an order to buy or sell as soon as possible at the best available market price.

Some CFD market makers will allow you to place a market order when the market is closed, and so will get you in when the market next opens. Other CDF market makers will require you to place the order when the market is actually open. So this may be important if you work in the mornings and so may not have access to your computer at those times.

CFD limit order

A limit order to buy CFDs at a limit price means that you will buy the CFD if the price trades at or below that limit price.

A limit order to sell CFDs at a limit price means that you will sell the CFD if the price trades at or above that limit price.

Limit orders may be used to enter a position, or to exit a position.

For example, to enter a long CFD position you can place a limit order to buy a CFD if the price trades at a specific price or lower. When placing these orders in the evenings, some platforms will allow you to place these limit buy orders at a price that is either above OR below the last traded price. If placing the limit order above the last traded price, this means that if the CFD trades at or below that price tomorrow, you’ll get into the trade. So it gives you a good chance to enter the CFD during trading hours tomorrow.

As a different example, you can exit a long CFD position with a limit order to sell CFDs. This is otherwise known as a take profit order. For example, if you’re in a long CFD position and the price is currently $11.70, and you set a limit sell order at say $12.20 which is your profit target, if the price rises to or above $12.20, then you’ll be exited at your profit target.

Note that these prices are for illustration only and is not a recommendation or a part of any particular system.

CFD stop order

A stop order to buy CFDs at a stop price means that you will buy the CFD if the price trades at or above that price.

A stop order to sell CFDs at a stop price means that you will sell the CFD if the price trades at or below that price.

Stop orders may be used to enter a position, or to exit a position.

For example, stop orders are commonly used as “stop loss” orders to exit you from a trade if the trade goes against you. If you’ve bought some CFDs at $2.30, and set a stop loss order at say $2.10, this means that you will sell the CFDs and thus getting you out of the position, if the price falls to or below $2.10.

As a different example, stop orders can be used to enter a position, otherwise known as a “stop entry”. For instance the price of a CFD is currently $8.00 you may place a stop buy order at $8.25, this means that if the price rises up to and above $8.25, you will be taken into the trade.

Note that these prices are for illustration only and is not a recommendation or a part of any particular system.

If Done Orders

If you want an order to be active only after another order is filled, then you're looking to do an "if done" order.

For example, if you're placing a limit order to enter a CFD in the evening with a CFD provider that allows orders to be placed out of market hours, then you may also want to place your stop loss order at the same time. But you don't want that stop loss order to be active until you actually enter the position.

Therefore, you can set up a limit order to enter a CFD (that's placed, and is pending to be filled), and then you place a stop loss order also, but it's linked to the first order, as an "if done order".

Differences in order placements between different providers

Note that different CFD brokers may execute these orders slightly differently.

For example, some providers will require that an adequate volume of underlying stock is traded at your stop loss before you stop loss is filled. While some providers require only that the underlying stock was traded at the price to exit the CFD. On the other hand some providers will do a weighted average price if there’s inadequate volume at one price level.

The way to find out these details, check with the provider.

Go on to part 4 of this series on: CFD Trading

Note:

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