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Market Orders: What is a Market Order?

Market Orders are common foreign exchange products used by foreign exchange brokers for businesses and individuals looking to make a money transfers once an agreed exchange rate is reached. 

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This gives you an exchange rate you are satisfied with and guarantees you won’t need to monitor the foreign exchange marketplace or fret about your currency exposure. Market orders are suitable if you need to make repayment without any immediate pressure. 


The different variations of market orders are required for different objectives. For example, if the GBP to EUR currency exchange rate was 1.130, a limit order would permit you to target a higher foreign exchange rate, such as 1.1650. If this price and your target are achieved, your currency exchange will automatically be made.

Conversely, a stop-loss order would aid you to secure your project from an unfavourable GBP/EUR currency movement, by establishing a stop order for lower foreign exchange rate such as 1.1150. If the exchange rate was to tumble to that trading level, your exchange will once more be automated at that point, no matter whether the rate would continue to depreciate. 

An OCO order is just a hybrid of both market orders. In this exact example, if the price were to fall to 1.1150, your stop-loss order would immediately be activated as well as your currency transfer made, cancelling your limit order. Vice versa, if the rate reached 1.1650, your currency trade would once again be made and would eliminate your stop-loss order.


The benefits of using a market order for either your business or personal currency transfers include the ability to target a better exchange rate and to lower the amount of currency required to complete your foreign exchange transfer if the exchange rate is achieved.

 If the exchange rate improves due to world events such as a recession, pandemics elections the currency exchange rate can rise allowing you to reach your targeted exchange rate. In turn this exchange rate improvement will mean the cost of your money transfer will have been reduced due to the improvement in the exchange rate. Another benefit of a market order is that it can be cancelled without cost, providing the agreed exchange rate level of the market order hasn’t been met.


Whilst there are benefits to using a market order the downside occurs if the exchange rate doesn’t improve but weakens meaning that you don’t reach the desired exchange rate level. If this occurs, you run the risk of having to trade at a worse exchange rate, than if you had made an immediate transfer on the first day. The risk of a lower exchange rate  can however be overcome or limited by using a stop loss in conjunction with the market order.


Company XYZ limited needs to convert £2 million in US dollar within the next 6 months. At the time of contacting their foreign exchange broker, the GBP/USD exchange rate is trading at around 1.3156. Following consultation with their foreign exchange broker, the CFO of XYZ limited decides to set a limit order for 1.348, believing the rate could appreciate at least 2%. However, knowing the pair could be volatile due to political and economic uncertainties the CFO also implements a stop loss at 1.2892.

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Three months later the limit order of 1.348 is triggered meaning that XYZ limited exchanges £2m for $2,696,000. Essentially a saving of ,800 when compared to the rate available when they initially contacted their foreign exchange broker.


Market order and stop loss pricing will vary on the currencies being exchanged and the volume of currency being transferred. Typically, market orders will be priced very similarly to Spot contracts and forward contracts with Foreign exchange brokers charging 0.5% to 3 % commission on the total value of the money transfer.


There are 2 types of market orders: stop-loss orders as well as limit orders.

Limit order

A limit order is when a client nominates an exchange rate they would like to achieve. The foreign exchange broker will then monitor the market and automatically book the transfer on behalf of the client once the specified exchange rate has been triggered.

A limit order is generally more appropriate for people who do not have to transfer money immediately and have the time to monitor the market or are expecting exchange rates to increase.

While a client may specify an exchange rate they would like to achieve to a foreign exchange broker, it is also important to factor in the margin charged by the provider. For example, a client looking to sell GBP 100,000 and buy AUD when the exchange rate reaches 1.90, would also have to factor in the provider’s margin. If a foreign exchange broker charges a 0.5% margin on transfers, then the market would need to reach a rate of 1.9095 for the client to achieve a rate of 1.90.

When a limit order triggers, the foreign exchange broker would contact the client to confirm the transaction and ask for payment to be remitted immediately to their account. The beneficiary bank account details will also be taken so the foreign currency can be remitted to the beneficiary upon receipt of the client’s funds.

A limit order is not a legally binding transaction until the nominated exchange rate is reached in the market. Up until this point a limit order can be cancelled or amended, however, once the market reaches the specified exchange rate the transaction will be booked immediately and thus becomes legally binding.

Of course, there is no guarantee the nominated exchange rate will be achieved and markets may fall or move against the client. Therefore some foreign exchange brokers offer Stop Loss orders whereby conversely the client nominates the ‘worst case’ exchange rate they would like to obtain should the markets continue to fall.

A stop-loss protects clients from further losses should the currency market fall, however not all foreign exchange brokers offer stop-loss orders due to the associated risks.

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Stop Loss Order

A stop-loss order works similarly to a limit order, yet instead of specifying the target rate at which you intend to purchase money, you define the minimal currency exchange rate at which you would be willing to trade. It may seem counterintuitive to establish a rate below what the foreign exchange market is currently supplying, but a stop-loss order makes certain that if the markets turn against you, you will not lose. If, as an example, you know that your budgeting takes into account a certain exchange rate, then you can activate a stop-loss order at that rate, therefore ensuring your financial commitments can be met.

It is worth noting that limit orders, as well as stop-loss orders, can be combined as a component to a company’s currency risk management approach. By placing both contracts in place, you can try and achieve a favourable currency exchange rate (limit order), however, are additionally protecting yourself against negative market fluctuations (stop-loss order). If both are combined, at the point that the limit order or stop-loss order is activated, the other market order is immediately terminated. This combined approach is sometimes known as an OCO order.

One-Cancels-the-Other order

An OCO order (or One-Cancels-the-Other order) is a combination of both a limit order as well as a stop-loss order. OCO orders put a targeted limit order level above the existing Foreign exchange rate, as well as a stop loss level below it.

OCO orders determine that if the rate moves up to your desired Foreign exchange trading level, the trade will be automatically activated and your currency will be exchanged at your targeted foreign exchange rate, also cancelling the lower rate stop loss level. Additionally, if the Foreign exchange rate trends down and triggers the stop loss level before the limit order level, your currency trade will be made and also your higher limit order level will certainly be automatically cancelled. 

Booking a Market Order

An individual or business can book a market order over the phone in much the same way as a spot or forward contract. The client will need to state the exchange rate they wish to buy at, the amount of currency they wish to exchange and the time frame for the market order.  This time frame represents how long they have to complete their money transfer.  

The time frame is how long the market order could last, for example six month, unless the targeted exchange rate is met before. In which case the money can be transferred at that point.

Foreign exchange broker

A foreign exchange broker will typically allow their clients to book a market order over the phone. It is rare that client would have the ability to book a market order online, especially if the amounts involved are significant. Once the target exchange rate, time frame, and amounts are agreed the market order will be booked by the foreign exchange broker. An email confirmation will be sent shortly afterwards.

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If the market order is booked and the exchange rate met the broker will notify the client and request any outstanding funds are sent to complete the transaction.

  • NewbridgeFX: Marker Order – NewbridgeFX are a UK based foreign exchange broker that offer market orders to businesses and high net worth individuals to manage their foreign exchange risk. 


Whilst a market orders can be supplied by banks these will usually be by private banks to High-net-worth individuals, business or corporate banks to businesses. Market orders will rarely be offered by retail banks. Banks that do offer individual and business clients the ability to book market order will normally offer their products over the phone and occasionally on their online trading platforms to corporates.

Market Order for Business

The use of market orders for businesses dealing or purchasing goods overseas can be beneficial. When exchange rates move in the businesses favour, the cost of purchasing goods overseas can be reduced dramatically. Targeting aa exchange rate allows businesses to benefit from exchange rate movements within an invoice payment date, for example 90 days.  Currency pairs exchange rates can move 1-3% in a short time frame meaning effective use can benefit a company significantly.

A stop loss can also be added to provide the business with a further level of protection. Meaning businesses can manage costs by limiting risk of significant currency fluctuation and ensuring the transactions are kept in budget.

Market Order for Individuals

Individuals making significant overseas purchases will gain access to market orders via a foreign exchange broker. If for example, the client is purchasing an overseas property and is working to tight budget a market order allows the client to reduce costs if the targeted exchange rate is met.

If a limit order is coupled with a stop loss the client purchasing a property also has the benefit of limiting the risk of negative currency volatility. A stop loss represents the lowest exchange rate they are willing to trade at and the limit order the higher exchange rate they would ideally trade at. Which ever exchange rate is met first the client then trades at.

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