A limit order enables you to set a specific rate of exchange that is above current market levels. Once this rate is reached, you will automatically purchase your currency. Limit orders are particularly useful if you know you need to make a payment in a foreign currency at some point in the future, but are not bound by tight deadlines. If this is the case, then it is worth using a limit order to try and achieve a better exchange rate than the one available at the present moment. Putting plans in place to take advantage of favourable currency movements can be an astute move for businesses with dealings in foreign currencies.

A limit order enables you to set a specific rate of exchange that is above current market levels. Once this rate is reached, you will automatically purchase your currency. Limit orders are particularly useful if you know you need to make a payment in a foreign currency at some point in the future, but are not bound by tight deadlines. If this is the

A stop loss order works in a similar fashion to a limit order, but instead of specifying the target rate at which you want to purchase currency, you specify the minimum exchange rate at which you would be willing to trade. It might seem counterintuitive to set a rate below what the market is currently offering, but a stop loss order ensures that if the markets turn against you, you will not lose out. If, for example, you know that your budgeting factors in a specific exchange rate, then you can activate a stop loss order at that rate, thereby ensuring your financial commitments can be met.

It is worth noting that limit orders and stop loss orders are often run together as part a business’s currency risk management strategy. By putting both in place, you are able to try and achieve a favourable exchange rate (limit order), but are also protecting yourself against unfavourable market moves (stop loss order). If both are run together, then at the moment the limit order or stop loss order is triggered, then the other is automatically cancelled.