The Connection between Orders, Trades, and Positions

In the platform, it's easy to track how a position was opened or a trade was executed. Each trading operation is assigned a unique number known as a ticket. Each order and trade will have the ticket number of the position they influenced. Similarly, each trade will have the ticket number of the order that led to its execution.

If a position is affected by multiple trades, for instance, during partial closures or increasing the position, each trade will have its respective ticket number recorded. This makes it effortless to trace the entire history of a position.

When trading operations are sent to the exchange or liquidity provider, they are additionally recorded with an identifier from the external system. This allows for tracking the connection between operations even beyond your platform.

General scheme of trading operations:

1. An order with specified parameters is sent from the trading platform to the broker for execution.

2. The order undergoes validation on the server to ensure correctness of prices, availability of funds in the account, and other relevant criteria.

3. Orders that pass the validation process await subsequent processing on the trading server. The order can then undergo the following outcomes:
- Executed (in one of the automatic execution modes or by a dealer).
- Expired after its validity period has elapsed.
- Rejected (e.g., due to insufficient funds or absence of suitable market offers; the order may also be rejected by a dealer).
- Canceled by the trader.

4. The result of executing a market order or triggering a pending order is the completion of a trade.

5. If there is no existing position in the instrument, the result of trade execution is the opening of a new position. If there is an existing position, the result of the trade can be an increase or decrease in position volume, position closure, or position reversal.

Position accounting systems

The trading platform supports two position accounting systems: Netting and Hedging. The system used depends on the account type and is determined by the broker.

Netting System

In the netting system, only one open position per symbol is allowed on the account at any given time:

If there is a position in a specific instrument, executing a trade in the same direction will increase the volume of that position. If a trade is executed in the opposite direction, it will reduce the volume of the existing position, either closing it (when the trade volume equals the volume of the current position) or reversing it (when the volume of the opposite trade is larger than the current position).

It does not matter whether the trade in the opposite direction is executed as a result of a market order or when a pending order is triggered.

Below is an example of various buy trades executed and their respective volumes:

Hedging system

The hedging system allows multiple trading positions on the same financial instrument, including positions with different directions (long and short).

If there is an open position for a specific financial instrument, and the trader executes a new trade (or a pending order is triggered), a new position is opened. The existing position remains unchanged.

Impact of the Position Accounting System

Depending on the position accounting system used on the account, certain trading platform functions behave differently:

Rules for Take Profit and Stop Loss Inheritance change.

In the netting system, to close a position, it is sufficient to execute a trade of the same volume and in the opposite direction. In the hedging system, you need to explicitly choose the "Close Position" command from the position's context menu.

Reversing a position is not possible in the hedging system. In practice, it involves closing the current position and opening a new one with the remaining volume.

The hedging system introduces a new margin calculation condition known as Hedged Margin.

Types of Orders

The trading platform allows you to prepare and submit orders to the broker for trade execution. Additionally, the platform enables control and management of open positions, using several types of trading orders. An order is a client's instruction to the brokerage company to execute a trade operation. Orders in the platform are divided into two main types: market and pending orders. Apart from these, there are Stop Loss and Take Profit orders.

Market Order

A Market Orderis a brokerage company's instruction to buy or sell a financial instrument. The execution of a market order results in the immediate execution of a buy or sell trade. The price at which the trade is executed depends on the type of execution, which is determined by the instrument type. In general, buying occurs at the ask price, and selling occurs at the bid price.

Pending Order

A Pending Order is a brokerage company's instruction to buy or sell a financial instrument in the future, based on certain specified conditions. There are several types of pending orders:

Buy Limit — A trading order to buy at the "Ask" price equal to or lower than the specified price in the order. The current price level is higher than the value set in the order. Buy Limit orders are usually placed with the expectation that the instrument's price, after reaching a certain level, will start rising.

Buy Stop — A trading order to buy at the "Ask" price equal to or higher than the specified price in the order. The current price level is lower than the value set in the order. Buy Stop orders are usually placed with the expectation that the instrument's price will overcome a certain level and continue to rise.

Sell Limit — A trading order to sell at the "Bid" price equal to or higher than the specified price in the order. The current price level is lower than the value set in the order. Sell Limit orders are usually placed with the expectation that the instrument's price, after reaching a certain level, will start decreasing.

Sell Stop — A trading order to sell at the "Bid" price equal to or lower than the specified price in the order. The current price level is higher than the value set in the order. Sell Stop orders are usually placed with the expectation that the instrument's price will reach a certain level and continue to decrease.

Buy Stop Limit — This type of order combines the first two types, serving as a stop order to place a limit order for buying ("Buy Limit"). As soon as the future "Ask" price reaches the stop level specified in this order ("Price" field), a "Buy Limit" order will be placed at the level specified in the "Stop Limit Price" field. The stop level is set above the current Ask price, while the Stop Limit price is set below the stop level.

Sell Stop Limit — This type of order is a stop order to place a limit order for selling ("Sell Limit"). As soon as the future "Bid" price reaches the stop level specified in this order ("Price" field), a "Sell Limit" order will be placed at the level specified in the "Stop Limit Price" field. The stop level is set below the current Bid price, while the Stop Limit price is set above the stop level.

Take Profit

Take Profit is designed to secure profits when the price of a financial instrument reaches a predicted level. The execution of this order leads to the complete closure of a position. It is always associated with an open position or a pending order. Take Profit can only be set together with a market or pending order. When checking the condition of this order for long positions, the Bid price is used (the order is always set above the current Bid price), and for short positions, the Ask price is used (the order is always set below the current Ask price).

Stop Loss

This order is intended to minimize losses in case the price of a financial instrument starts moving in an unfavorable direction. If the instrument's price reaches this level, the position will be fully closed automatically. Such an order is always associated with an open position or a pending order. It is issued by the brokerage company only together with market or pending orders. When checking the condition of this order for long positions, the Bid price is used (the order is always set below the current Bid price), and for short positions, the Ask price is used (the order is always set above the current Ask price).

In the Netting system:

When a position is partially closed, the Stop Loss and Take Profit levels remain unchanged with the new order. When a position is fully closed, the Stop Loss and Take Profit levels are deleted since they are linked to the open position and cannot exist without it. When a trade is executed on a symbol

where there is already a position, the current Stop Loss and Take Profit values of the open position are automatically filled in the order window to avoid accidentally deleting the current stop orders.

When a trade is executed with one click (via the chart panel or Market Watch) on a symbol where there is already a position, the current Stop Loss and Take Profit values of the open position are not changed.

On the over-the-counter market (Forex, Futures), when a position is rolled over to the next trading day (swap), including by re-opening, the Stop Loss and Take Profit levels are preserved.

On the exchange market, when positions are rolled over to the next trading day (swap), as well as when transferring positions to another account or settlement, the Stop Loss and Take Profit levels are reset.

In the Hedging system:

When a position is partially closed, the Stop Loss and Take Profit levels remain unchanged with the new order.

When a position is fully closed, the Stop Loss and Take Profit levels are deleted since they are linked to the open position and cannot exist without it. When a trade is executed with one click (via the chart panel or Depth of Market), Stop Loss and Take Profit are not set.

Trading Stop

The Trading Stop (Trailing Stop) is used to minimize losses in case the price of a financial instrument starts moving in an unfavorable direction. When an open position becomes profitable, the Trading Stop can be manually moved to a breakeven level. This tool is particularly useful during strong one-way price movements or when it's not possible to closely monitor market conditions.

The Trading Stop is always linked to an open position or a pending order. It operates within the trading platform and not on the server like the Stop Loss. To set it, you can click on "Trading Stop" in the context menu of a position or order in the "Trade" tab.

The Trading Stop works as follows

With the arrival of new quotes, the platform checks if the open position is profitable. Once the profit in points becomes equal to or greater than the specified level, an automatic command is issued to set the Stop Loss order at the specified distance from the current price. If the price moves in favor of the position, the Stop Loss automatically trails along with the price. If the profitability of the position decreases, the order remains unchanged. This way, the profit of the trading position is automatically locked.

If a Stop Loss level has already been set for the position, it also trails along with the price as the position becomes more profitable and remains unchanged if the position's profitability decreases.

Order Status

After the order is formed and sent to the trading server, it can go through the following stages:

Started — The order has been checked for correctness but has not been accepted by the broker yet.;
Placed — The broker has accepted the order;
Partially filled — The order has been partially executed;
Filled — The order has been completely executed;
Canceled — The order has been canceled by the client;
Rejected — The order has been rejected by the dealer;
Expired — The order has been canceled after its expiration.

You can view the status of orders on the "History" tab in the "Status" field. The status of pending orders can be viewed on the "Trading" tab.

Types of execution

There are four types of order execution in the trading platform:

Instant ExecutionIn this mode, the execution of a market order is done at the price offered by the broker. When a request for execution is sent, the platform automatically fills the order with the current prices. If the broker accepts the prices, the order will be executed. If the requested price is not accepted by the broker, a "requote" occurs, where the broker returns prices at which the order can be executed.

Request Execution In this mode, the execution of a market order is done at a price previously obtained from the broker. Before sending the market order, the broker is asked for their execution prices. After receiving the prices, the trader can either confirm or reject the order execution at those prices.

Exchange Execution) In this mode, the trading operations performed in the platform are sent to an external trading system (exchange). The trading operations are executed at the prices of the current market offers.

Execution Policies

In addition to the general order execution rules set by the broker, the trader can specify additional conditions in the "Fill Policy" field when placing an order:

Fill or Kill This execution policy means that the order can only be executed in the specified quantity. If there is not enough volume of the financial instrument available in the market at the moment, the order will not be executed. The required volume can be composed of multiple offers currently available in the market.

Immediate or Cancel In this case, the trader agrees to execute the order at the maximum volume available in the market within the order's specified limits. If the full execution is not possible, the order will be executed for the available volume, and the unfilled portion of the order will be canceled. The possibility of using IOC (Immediate or Cancel) orders is determined by the trading server.

Return This execution policy is used for market (Buy and Sell), limit, and stop-limit orders. In case of partial execution, the order with the remaining volume is not canceled but continues to be active.

Each execution policy has its own characteristics and is used by traders to manage their orders according to their trading strategies and requirements.