Finder is committed to editorial independence. While we receive compensation when you click links to partners, they do not influence our opinions or reviews. Learn how we make money.
Using limit orders on currency trades
A limit order can help you save money on future currency investments.
Know which way the market’s moving? Then you may want to start placing limit orders. This “hedging” tool can help you get better deals on currency trades if you make the right predictions.
What is a limit order?
With a limit order, you set instructions to prevent your transaction — a forex trade or money transfer, for example — from being executed until the market price reaches your specified exchange rate.
How do limit orders work?
A limit order allows you to guarantee the price you’ll buy or sell a currency at. There are two types:
- Buy limit orders. Placing a buy limit order allows you to set a price you want to buy your desired currency at. Once the currency drops to your specified price, the exchange will be made automatically.
- Sell limit orders. A sell limit order allows you to set a price you want to sell the currency you currently have at. Once the rate rises to your specified price, the exchange will be made automatically.
Limit orders: An example
Let’s say the euro-to-dollar currency pair is currently at EUR/CAD = 1.1 (meaning 1 euro buys 1.10 CA dollars). You want to buy euros with your dollars, but you want to wait until the euro becomes a bit cheaper.
In this case, you could place a buy limit order at EUR/CAD = 1.08. When the market reaches that exchange rate, your brokerage executes your buy limit order, getting you euros at a better price.
Pros and cons of limit orders
- Allows for more hands-off trading. Once you set your limit order, it’ll be fulfilled automatically when the currency reaches the set price — even if you’re not online to make the trade.
- Increases likelihood of making a profit. You can choose to set limits that will turn a profit when your order is filled. But if your order isn’t filled, you could need to adjust your limits.
- Orders aren’t always filled. If your chosen investment never hits the price you want, the order will never be filled.
- Can reduce potential profit amounts. For example, if you set a sell limit order and it’s fulfilled but a currency continues to skyrocket, you could lose out.
Compare providers that can help you set up limit orders
What else should I know?
A limit order is different from a stop-loss order. With a limit order, you’re looking for a price that’s better than your target price (whether you’re buying or selling). On the other hand, a stop-loss order prevents executing a transaction at a price that’s worse than your target price.
Limit orders are one potential tool that can be used to help you trade foreign currencies and other investments. But they’re not the only choice. If you’re new to trading, learn about hedging options and consider consulting a professional or if you’re ready to go, compare forex trading tools to begin trading.
Frequently asked questions
Read more on this topic
Bank of America wire transfers review With Bank of America, you can send money to more than 200 countries worldwide with the funds arriving typically within two business days. Branches are located in the US only.
Zelle review Have a US bank account and need to send money at a moment’s notice? Zelle could be the app for you — especially if your bank is already a Zelle partner.
Chase Bank wire transfer review Compare international and domestic money transfer options from Chase (available in the US).
How to find a Ria location Ria’s global network of over 435,000 agent locations allows for convenient cash pick up in 160 countries worldwide.
List of SWIFT codes for all banks in Mexico Sending an international money or wire transfer to a bank in Mexico? Find the SWIFT codes for all the banks in Mexico here.
How to find a WorldRemit location Find WorldRemit locations near you and abroad to send or receive cash in as little as a few minutes.
Find a MoneyGram location Send or pick up cash from over 350,000 locations in 200 countries around the globe.
HSBC wire transfers review Transfer funds around the globe quickly and easily with HSBC international money transfers. Learn how for your next secure money transfer.
How to use Facebook Pay Exactly how do you use Facebook Messenger to send or request money? Is it safe? Find out what happens when you use the app to send money to someone.
How to send door-to-door cash Learn how to take advantage of door-to-door cash by getting money delivered directly to your home or recipient’s doorstep.