Both a Limit Order and a Limit Order Forward allow you to set a target exchange rate and automate your transaction once the market reaches that rate. The primary difference lies in when the actual currency exchange (settlement) occurs and the type of rate used to trigger the order.

A standard Limit Order triggers a conversion, meaning once your target rate is hit, the conversion happens immediately. A Limit Order Forward triggers a "Forward" deal, allowing you to lock in a target rate now for a transfer that will take place on a specific date in the future (up to 12 months away).

Why is this important

Understanding the distinction helps you choose the right strategy for your specific business or personal needs:

• Settlement Timing:

  • Limit Order: Best for immediate requirements where you want a better rate than the current market offers but are ready to send the funds as soon as the rate is reached (usually within 1-2 business days).

  • Limit Order Forward: Ideal for future obligations (like an invoice due in six months) where you want to protect your budget against market volatility without needing the cash immediately.

• Rate Calculation:

  • Limit Order: Uses the Spot Rate, which is the current price to exchange one currency for another.

  • Limit Order Forward: Is based on the specific rate available for your chosen maturity date (or time period), rather than the immediate "right now" market price.

• Requirements:

  • Limit Order: Available to most OFX account holders by default.

  • Limit Order Forward: Requires your account to be enabled for Forward Contracts. If you do not see the option to select future settlement dates when setting an order, you may need to contact an OFXpert to update your profile permissions.

Related FAQ Articles

• How do I create a Limit Order?

• How do I book a Forward Conversion?

• How do I create a Limit Order Forward?