How to Trade with a Pending Order?

how trade pending orderThere are several types of orders on Forex. Each of them has its pros and cons. But in this article, I would like to tell you what are pending orders and how to set them. So, let’s go.

A pending order is a trader's request to buy or sell when the price reaches a certain level. That is, if the price rises (or falls) to the desired level, pending orders will turn into transactions.

Pending orders allow us to react in time to a change in the current market situation, if you suddenly find an incomplete reversal pattern, or if you are sure that the trend will continue. Also, with the system of Forex pending orders, there is no need to continually sit at the computer and follow all sorts of changes.

Types of pending orders

There are four main types of pending orders on Forex: Buy Limit, Sell Limit, Buy Stop, Sell Stop.

Buy Limit is designed to trade on the rebound from the support level and reversal of the trend from the down to the up;
Sell Limit is for trading on the rebound from the resistance level and the trend change from bullish to bearish;
Buy Stop is designated for trading at the breakdown of the resistance level and the continuation of the upward movement;
Sell Stop - for trading on the breakdown of the support level and the continuation of the bearish trend.

Let’s go in more detail.

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Buy Limit

The Buy Limit order is set below the current price of the asset, for the prospect of a price rebound from the support level. That is, when analyzing the market, though there is a bearish trend at the moment, a trader assumes that the downtrend will end soon and the price will turn back. So he puts the Buy Limit order at the support line or the border of the channel.

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That is, as you can see, the trader expects the price to reach the support level and turn around. At the pic above, blue indicates the support level which the price must reach and rebound. Approximately at this level, it is necessary to open the Buy Limit order. If the price does not turn around but continues to move down, the Buy Limit order will not be opened.

Sell Limit

It is the same type of order as Buy Limit, but in the opposite direction – from resistance. It is a sell order which is put up above the current price of the asset. That is, the Forex trader places the Sell Limit order, waits until the price reaches the resistance level and turns around. Thus, he sells more expensively than at the current price.

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So, these types of pending orders are often used in the Forex market. For example, some news trading strategies include placing orders such as Buy Limit and Sell Limit.

Buy Stop

The trader opens the Buy Stop order if he expects the trend to continue. It is put above the current price of the asset. That is, this type of order is used to enter a position to buy at a price that will always exceed the current price of the asset.

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It is relevant to use such an order only if the trader is already waiting for the breakdown of a graphic figure or an overcome of a critical level going upwards, which ultimately marks the following increase of the currency price. As soon as such conditions arise, the order will automatically trigger and the position will be opened.

Sell Stop

Here, the situation is the opposite, and therefore it is supposed to place a sell order at a price that should be lower than the current one. Traders use it in order to sell a currency that will fall in price quickly. Therefore, it is necessary to use this pending order in case if there are all the prerequisites for the fact that the price of an asset will fall soon.

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To remember the differences between pending order types, keep this pic in mind:

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How to set a pending order?

And now let’s talk how to set a pending order in your terminal. It’s very easy. Just call the order opening window in any way convenient for you. Then choose Pending order in the Type field:

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After that, choose the type of the pending order you want to set:

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And set the necessary features of the order:

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1 - choose the needed currency price, at which you want to open an order4
2 - set the volume size for this order;
3 and 4 - don’t forget to set Stop Loss and Take Profit;
5 - point out the price at which an order should be opened;
6 - set the expiration time. If the order is not opened before this time, it will be deleted.

So, as you can see, pending orders are a great tool for traders. It only may seem difficult at first, but just try using them and you’ll like it. But if you are not ready to apply them yet, you may apply common Market order execution of orders. By the way, JustForex offers the fastest order execution at the market from 0.05 s.

Read 1679 times Last modified on Sunday, 27 January 2019 16:23