Stop and Limit Orders Will Stay at FOREX.com
FOREX.com responds to the new NFA Compliance Rule about FIFO order execution
As a result of a new NFA compliance rule 2-43(b), some major US forex brokers have announced that their trading customers will no longer be able to enter stop and limit orders beginning August 1, 2009. Stop and limit orders are important tools that help you maximize potential profits and limit downside risk. Not having access to them can put you and your trading strategy at a distinct disadvantage.
FOREX.com is fully capable of supporting the new rule. As a result, FOREX.com customers may enter stop loss and limit orders and utilize all other advanced order types currently available on the FOREXTrader platform, including One Cancels Other (OCOs) and Trailing Stops.
What is FIFO Order Execution?
With the FIFO method, when multiple trades are executed in the same currency pair to establish a position, the trade first opened is the first closed.
| Trade Date |
Trade Time |
Position |
| 29-Jul |
10AM |
Buy 10,000 EUR/USD @ 1.4000 |
| 30-Jul |
12PM |
Buy 50,000 EUR/USD @ 1.4050 |
| 30-Jul |
2PM |
Buy 20,000 EUR/USD @ 1.4100 |
| 31-Jul |
11AM |
Buy 10,000 EUR/USD @ 1.4150 |
|
Total |
Buy 90,000 EUR/USD @ Average Price |
With FIFO order execution, if you are long 90,000 EUR/USD and sell 10,000, the earliest trade (from 29 Jul) is closed.
Questions? Click here to chat with a forex specialist.
