Limit orders: Definition, example and FAQs

limit-ordersGet the exchange rate you want for your international money transfer when you place a limit order.

Getting the best possible exchange rate is important whenever you send money overseas, but sometimes current market conditions don’t allow you access to the rate you want. This is where limit orders come to the rescue. A limit order allows you to choose the exchange rate at which you want to buy or sell a currency and your order will only be executed when the rate you want is available. These flexible tools offer a convenient way for you to stay on top of market developments, hedge your transfer and get the exchange rate you want for your transaction.

Updated December 17th, 2018
Name Product Minimum Opening Deposit Minimum Spreads for Major Currencies Commission Minimum Trade Size Platforms
$0
0.6 - 1.5 pips
$0
1 lot
MetaTrader 4
ProReal Time
AU$3,000
0.6 - 1.1 pips
$0
5,000 units
SaxoTrader
SaxoTraderGO
AU$500
0.5 - 1.22 pips
$0
0.01 lots
MetaTrader 4
At Pro
Advantage Web
US$200
0.0 - 0.1 pips
AU$3.50 per 100k traded
0.01 lots
MetaTrader 4
MetaTrader 5
cTrader
AU$200
0.0 pips - 1.0 pips
$0
0.01 lots
MetaTrader 4
MetaTrader 5
WebTrader

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Rates last updated December 17th, 2018
Name Product Min. Transfer Amount Transfer Speed Services Description Online Transfer Fee Rate Amount Received
TorFX International Money Transfers
AUD 200
1 day
Online, Phone, Bank Account to Bank Account
TorFX guarantees to match any competitor's exchange rate. Conditions apply.
Send money overseas in over 30 currencies. Once registered, you'll be assigned an account manager who can provide support and guidance.
OFX (Ozforex) International Money Transfers
AUD 250
1 - 2 days
Online, Phone, Bank Account to Bank Account
Limit orders applicable for amounts greater than AUD$30,000.
The ‘Rate’ and ‘Amount Received’ displayed are indicative rates that have been supplied by each brand or gathered by Finder.

Exchange rates are volatile and change often. As a result, the exchange rate listed on Finder may vary to the actual exchange rate quoted for the brand. Please confirm the actual exchange rate and mention “Finder” before you commit to a brand.

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Updated December 17th, 2018
Name Product Monthly fee Standard brokerage fee for ASX shares Margin trading - Online IPOs / Floats International shares
$0
$8 or 0.1%
Yes
Yes
Yes
Low brokerage fees on Australian and international shares. Earn 25 Qantas Points when you trade Australian shares, 50 Qantas Points when you trade international shares (T&C's apply).
$0
$9.50
No
No
No
Trade ASX-listed shares for a flat fee of $9.50, regardless of the trade size. New customers receive free access to Community Insights with SelfWealth Premium for the first 90 days. Follow other investors and benchmark your portfolio performance.
$0
$6.99 or 0.1%
Yes
No
Yes
Access over 19,000 Australian and global shares.
$0
$15 for trades up to $10,000
Yes
Yes
No
Enjoy tiered brokerage fees, Bell Potter research and eligible market-to-limit orders placed onto the ASX in under a second. For a limited time, get a custom deal based on your trading preferences when you switch to Bell Direct.

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Disclaimer: Trading in financial instruments carries various risks, and you can lose more than your capital. This article may contain general advice. You should always seek professional advice when deciding if a product is right for you.

What is a limit order?

A limit order allows you to choose a target exchange rate for an international money transfer - that is, the rate at which you are hoping to convert your Australian Dollars into another currency to be sent overseas.

This is a very flexible money transfer option that effectively allows you to keep pace with market developments and send money overseas at an exchange rate suitable to you. You can leave your order in place for up to six and even 12 months - if your desired exchange rate is achieved then the order will be triggered, but the order simply won’t be placed if the target rate does not occur.

How do limit orders work?

Trading on global currency markets occurs 24 hours a day, which might ordinarily mean that you might miss out on an attractive exchange rate overnight while you’re fast asleep. Limit orders are basically a way for you to get your money transfer company to monitor currency markets for you.

All you have to do is tell your money transfer provider your desired rate, how long you’re willing to wait for the order to be placed, the currency you wish to buy or sell and the amount you wish to purchase. You can then sit back and wait as your money transfer provider watches currency markets to see if your desired exchange rate can be achieved - if it can, your order will be placed.

For example, with the current exchange rate at 1 AUD = 0.69 USD, Greg isn’t quite prepared to send a transfer of $25,000 to the USA until he can get a better rate. He places a transfer limit order and nominates a target rate of 1 AUD = 0.74 USD, and when that rate is reached five months later, the transfer is triggered and Greg’s funds are sent overseas.

What are the types of limit orders?

This article deals with limit orders solely in regards to international money transfers; however, limit orders can be an effective tool across a wide range of investments including shares and commodities.

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How do I compare limit orders?

  • The company’s exchange rates. It’s important to check the exchange rates on offer from each money transfer provider to determine how close they are to the mid-market rates. This will give you a better idea of how much the market will need to fluctuate in order for the transfer company to be able to offer you the rate you want.
  • Fees charged. In addition to any transfer fee you will have to pay as standard, will you have to pay an extra fee when you place a limit order?
  • Length of order. How long will your order be valid for? Some companies will offer orders for up to 12 months while others will only allow you to place orders for 12 months.
  • How the order can be placed. Can you place a limit order online, over the phone or maybe using a mobile app?
  • Minimum amount. Is there a minimum limit you are required to transfer using a limit order? For example, limit orders placed with OFX need to be for amounts larger than $30,000.
  • Notification process. How will each provider notify you once your order has been placed?
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What are the pros and cons of limit orders?

Pros

  • Stay up to date. Limit orders allow you to make the most of market fluctuations, even while you’re asleep.
  • Get the exchange rate you want. Limit orders allow you to get better value for money when you send funds overseas.
  • Change your order. Until your desired rate is reached, you have the freedom to withdraw or change your order.

Cons

  • High amounts. Limit orders are typically only available for larger transfers, for example $20,000 or more.
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What are the risks of limit orders?

One thing to be wary of after placing a limit order is growing impatient and just accepting the current rate on offer, while another is the fact that you may have to wait months for your order to be executed and you could forget about it.

The other disadvantage of limit orders is that the exchange rate could keep on improving after your desired rate has been reached, but because you’ve already locked in your order you will be unable to take advantage of the rising market rate.

Frequently asked questions

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