Using Limit Orders to Lock in Ideal Exchange Rates
Limit orders allow you to manage currency fluctuations around the clock by setting a target buy or sell rate that represents a better value than the current exchange rate.
Limit orders can give you autonomy and transparency, protecting your balance sheet and budgeting your cash flow, at the target rate of your choosing.
What is a limit order and how does it work?
A limit order is an order to buy or sell a stock with a restriction on the maximum price to be paid (with a buy limit) or the minimum price to be received (with a sell limit). If the order is filled, it will only be at the specified limit price or better. However, there is no assurance of execution. A limit order may be appropriate when you think you can buy at a price lower than—or sell at a price higher than—the current quote. The thinkorswim® chart below illustrates the use of market orders versus limit orders.
In this example, the last trade price was $149.50. Let’s review the scenarios for each order type:
- A trader who wanted to purchase (or sell) the stock as quickly as possible could place a market order, which would in most cases be executed immediately at or near the stock’s current price (white line)—provided the market was open when the order was placed and barring unusual market conditions.
- A trader who wanted to buy the stock only if it dropped to $144 could place a buy limit order with a limit price of $144 (green line). If the stock fell to that level or lower, the limit order would trigger and the order would be executed at $144 or less. If the stock failed to fall to $144 or less, no execution would occur.
- A trader who wanted to sell the stock if it reached $164 could place a sell limit order with a limit price of $164 (red line). If the stock rose to that level or higher, the limit order would trigger and the order would be executed at $164 or more. If the stock failed to rise to $164 or more, no execution would occur.
- Booking limit orders directly on your online dashboard for spot deals
- Use limit orders to target a rate for a forward contract
Booking forward limit orders, which will lock in a forward contract automatically at your. Target rate, which and will be ready for early drawdown at your leisure.
- Easily monitor, modify or cancel your order, prior to it triggering
- Setting your target rate without additional fees to place the order
