Pending Orders in Forex Trading

Pending Orders in Forex Trading

When we first started Forex trading, we most often played “market orders” to get involved. You simply click the button to buy or sell and start. The market order tells the broker that you want to enter at the best price. There is no guarantee that you will get the price you see on the chart, but because Forex is extraordinarily liquid, most of the time it works.

Pending Order

Orders that are delayed in Forex, or other markets in this case are a series of instructions. You give these instructions to your MT4 broker about entering or exiting a position. Sometimes with a more complex MT4 platform, you can have several actions in the same order. At the most basic level, you are looking at a scenario. A scenario where you tell the market that you want to enter or exit a position at a certain price. If the forex market does not reach that price, then nothing happens. There are several types of orders but you will see the most basic ones you are most likely to find.

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Buy Stops

Stop buying only tells the broker that you want to buy a currency pair at a certain price. For example, if you lack the NZD / CAD pair at 0.91255 but you realize that you are wrong in your position if the market reaches the level of 0.91500. You place a purchase termination at that level to protect your account. This means that soon after the market reached 0.91500. You repurchase a position to close the trade and live to fight another day.

Sell ​​Stops

The selling stop is of course the opposite. If the price is touched, you want to sell the market, usually to close the position. Using the example of a GBP / USD pair, let’s say you are long at 1.20. And prices have done all the way to the handle of 1.23. You want to lock in some profits, so you decide to stop at 1.2250 just below. If the market travels back to the 1.2250 level, you sell your position and flatten the account, at least as far as the trade is concerned.

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Buy Limit

Buy Limit is an order that says you are willing to buy a currency pair at a certain price or better. For example you might want to buy the EUR / JPY pair at 109.05 yen which is currently lower than the market. When the market drops to 109.05 yen, you are only willing to buy it at a certain price, or better. It is possible to fill at a lower price because it is considered “better”. But that is rare, and almost always in situations where there is a lot of slippage during news events. If your price is not affected, nothing happens. You will pay 109.05 yen or less for that position.

Sell ​​Limit

Obviously, this is the opposite of purchase limit orders. Because you set the specific price you are looking for to sell this currency pair. For example, the EUR / USD pair is currently trading at 1.1238, and you realize that the 1.05 level above is the resistance area. You want to reduce the market if you go up in that area, and you are only willing to pay that price. You enter the sales limit at that level. And you get your trade filled at that price. Or higher to take advantage of the “better” part of trading.

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You should never use market orders if you can avoid them.

Indeed, we are all guilty of this, but you may not use market orders if you can avoid them. This invites slippage which can cause major problems. In most circumstances, this is not a serious problem, but it can happen. And more than that, if you slip, there is no other way. You can’t call your broker and complain about slippage and hope to get a favorable reaction. With limited orders, you have something to discuss.