Closing Order

A closing order is a trade instruction used to exit an open position in the financial markets. When a trader closes an order, they are finalizing the trade by selling an asset they previously bought or buying back an asset they previously sold. This action locks in any profits or losses from the trade. Closing orders are essential for managing risk, taking profits, and adjusting trading strategies based on market conditions.

Traders can close orders manually or use automatic exit strategies, such as stop-loss or take-profit orders, which close the trade when the price reaches a certain level. In fast-moving markets, using these tools can help protect capital and ensure trades are exited at the desired price.

Browse through other terms in our Trader’s Dictionary.