- Order. This is the direction to a brokerage company to buy or sell a financial security. There are two major types of orders: market and pending. Two more special orders are available in the new terminal - Take Profit and Stop Loss.
- Trade. It`s the fact of security buying or selling. A Buy is performed at the Ask price, while Sell is done at the Bid price. A trade can be opened as the result of market order execution or pending order activation.
- Position. It`s a market obligation, number of bought or sold security contracts. A long position is a symbol bought expecting the security price raise. A short position is the obligation to supply it expecting the further price fall. Only one position for a certain security can exist on a trade account.
How Does It Work?
An order to execute a trade with indicated parameters is sent to a broker from the client terminal. The order correctness is checked on the server. Are all the parameters (balance, lot, price, etc.) indicated correctly? If any of parameters does not meet the requirements, the order is rejected. If everything is correct, a trade order is placed to the Order Queue, after which it is sent to a dealer or to the market. An order can be also rejected in the market (stock exchange) or by the dealer.
An order turns into a trade if all its parameters are correct and it has been executed in the market. Depending on the current position for the security, the trade can result in the position increase, decrease or closing.
Example: we've got one position for EURUSD 1 Lot. If another lot is bought, the position will be increased to 2 lots. If 1 lot is sold, the position will be closed. If 0.7 lots are sold, the position will diminish to 0.3 lots.
Fill Policy
Besides common order execution rules set by a broker, trade operation execution policies can be set in MetaTrader 5. These policies allow making trading activities more flexible and setting strict parameters to manage the execution of trade operations.
source: http://www.metatrader4.com
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