What happens when you press Buy

The word order on a trading platform is read as an instruction to the broker. It is not a promise of a price. The platform sends the instruction to the broker, and the broker returns a fill. The fill is the price at which the trade actually opens. That price can differ from the one on your screen when you pressed the button.

A market order asks for the next available price. It does not name a price. The broker fills it at whatever price the market gives next. A limit order names a price and waits. It fills only if the market reaches that price. A stop order becomes a market order when a chosen price is touched. Each type has a different effect on the fill you get.

On the platform, these orders appear as buttons or menu choices. Buy and Sell are market orders. Limit and Stop are pending orders. The ticket shows the instrument, the size, and the price. For AUD/USD near 0.6640, the ticket might show 0.6640 as the current quote. The fill, however, will be the next price the broker can trade at.

The size you choose is measured in lots. One standard lot is 100,000 units of the base currency. In AUD/USD, the base currency is AUD. So one standard lot is 100,000 Australian dollars. The quote currency is USD, and the pip value is expressed in USD first, then converted to AUD. That conversion uses the current rate, so it changes as the rate moves.

Once the broker fills the order, the trade becomes an open position. The open position has an entry price, a size, and a direction. The direction is either long or short. A buy order opens a long position. A sell order opens a short position. The position now moves with the market until you close it.

The fill price is the entry price. It is the anchor for all later calculations. If you bought at 0.6640, that number is your entry. If the market later moves to 0.6650, the difference is ten pips. If the fill had been 0.6638, the same market price would be twelve pips away. The entry price is what the broker confirms, not what you saw before.

The platform shows the open position with a running profit or loss. That figure is not final. It changes with every tick. It also does not include costs that are charged later, such as commission or financing. The running figure is an estimate. The final result is known only when the position is closed.

While the position is open, the broker may charge financing. Financing is a daily charge or credit for holding a position overnight. It depends on the size, the instrument, and the broker's rates. Those rates vary between brokers. The platform usually shows the financing rate in the contract specifications. You can check it before you trade.

Closing a position is the opposite instruction to opening it. If you opened with a buy, you close with a sell of the same size. The close order is filled at the next available price. That fill becomes the exit price. The difference between the entry price and the exit price gives the gross result in pips.

The gross result is not the amount you keep. Costs attach at different points. The spread is the difference between the buy price and the sell price. It is charged on entry and on exit. A commission may be charged on entry and on exit. Financing may be charged each day the position is held. Each cost reduces the gross result.

The spread is quoted in pips. If the spread is 0.8 pips, and one pip is A$15.06, then one side of the spread costs 0.8 multiplied by A$15.06, which is A$12.05. If it is charged on entry and again on exit, the total spread cost is 2 multiplied by A$12.05, which is A$24.10. That amount is separate from the gross result.

Commission is often a fixed amount per lot per side. It varies between brokers. Financing also varies. Because these amounts are not the same everywhere, the final cost of a trade is not a single number you can memorise. You have to check the contract specifications for the instrument you trade. The platform shows the current spread, but commission and financing are usually listed separately.