Pending order for "Forex"

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

A pending order is a specific order to open a deal, which allows the trader to solve a very important task. It provides an opportunity to open a trade at a predetermined price. Thus, the trader does not have to constantly be in front of the monitor. Compared to immediate execution orders, trading in this format is more convenient, it reduces the time spent in front of the monitor waiting for the price to reach the optimal place to open a trade.

Clear benefits of pending orders

A pending order is a universal trading functionality that helps to minimize losses, which is a prerequisite for profitable trading. Corrective waves are considered to be the most convenient periods on the market for using this category of orders. Waiting for the price to return to a certain place and again continue to move along the trend is not quite the right line of behavior. The correction may be delayed, and a clearly expressed trend will reshape into a flat, which will only delay the moment of entering the market. In order not to rush and not wait at the monitor for an indefinitemoment, it is considered more rational to set pending orders at peak levels.

No slippage is a big advantage

Many traders are well aware of the concept of slippage. This is the opening of an order at a price higher or lower than that which is in the terminal at a certain point in time. The deal is opened for a certain number of points in the opposite direction. That is, the purchase or sale is carried out in the negative. There can be two reasons for this phenomenon. These are illegal actions on the part of the broker in order to cash in, or simply a poor technical component of the terminal, due to which the broker himself is slow to open a transaction. When pending Forex orders are used, the broker loses the opportunity to open a trade with profit for himself, and the trader gets maximum accuracy when entering the market.

Characteristics of pending orders

There are only four types of pending orders available to traders. Let's get to know each of them:

• Pending order Buy Stop. This is an order to a broker to buy an asset at a price that is higher than that available on the market. The decree is set in the situation when the continuation of the trend is planned in the future. A bet is made that the chart will break through the Ask price at a certain level.
• Buy Limit is an order to open a buy deal after the Ask price has reached a predetermined value. The order type is focused on opening a trade to continue an uptrend after a slight price correction.
• Sell Limitdesigned to open deals at the Bid price during a long downtrend. The order will be activated when the price drops below the actual value on the market after a short northern trend.
• Sell Stop is another order type focused on selling an asset. Quotes are sold at the Bid price, after the price drops below the actual level.

What settings do I need to activate pending orders?

To activate a pending order, just fill in the built-in form in the terminal. As part of the functionality, the volume of the transaction is set. The price at which the order will be activated must be fixed. Some brokers require stop loss and take profit settings. Others allow you to ignore these values. You need to pay attention to the type of order that you plan to open. If the selected program does not correspond to the situation on the market, the order will simply not be activated. Another point is the activation time. The terminal prompts you to set the time during which the order can be activated. If the price does not reach the predicted level by the set date and time, the order will be cancelled.

Important points worthy of attention

Studying "Forex for Dummies", it is unlikely that you will be able to find important points of using orders. It is worth paying attention to the fact that pending orders do not always work. Brokers may not activate an order if a gap has formed on the market.a price gap resulting from a sudden change in price. Gaps can be observed most often after the weekend, especially if there are important economic or political events taking place on the world stage at this time. In practice, if an order falls into a gap, this is actually a signal to cancel it. You can also talk about special conditions for the execution of pending orders, which each broker determines individually. The rules are based on observing the distances from the actual price to the order being set. This parameter already pre-includes the spread for each individual pair. Each trading instrument has its own size of this value. The broker reserves the full right to refuse to correct an order if the price is already in close proximity to it.

Stop Loss and Take Profit within a pending order

Trading with pending orders opens up great prospects for traders. Many hours of work in front of the terminal can be successfully replaced by just a few hours of analyzing the situation to make trading decisions. Orders provide an opportunity not only to open a deal at a clearly set price, they provide for its closure at a profit or loss. It is absolutely not necessary to control the situation in the foreign exchange market. The broker will do everything on his own, in accordance with the established prices for closing the transaction. All that remains for the trader is to evaluate the results of his trade, successful or not. Multifaceted settings for pending orders allow you to removecream from the market, when certain patterns are formed on it, and there is simply no opportunity to be in front of the terminal.

Why four types of orders when you can limit yourself to just two?

Studying "Forex for Dummies", many beginners repeatedly ask themselves why there are four types of orders, when they could be limited to only two: buying and selling. It's simple: trying to make life easier for novice market participants, brokers have built in the most detailed orders in order to reduce the number of errors and misses. This feature of orders is especially relevant for working on the stock exchange. As you know, compared to Forex, it provides for a fairly large amount of commission. And if a deal is opened in the wrong direction for a few seconds, and then closed, this is fraught with big losses. Note that all pending orders are carefully stored on the brokers' servers and are activated regardless of whether the terminal is turned on at the moment the price reaches a certain level or not.

Why don't orders work?

Many traders who use Forex Expert Advisors to set pending orders, as well as those who set them manually, have repeatedly complained that profitable orders simply do not work, provided that the price catches them. The situation is very common, and it is mainly associated with such a concept as the spread, which always plays against traders. Existsalways the difference between the purchase price and the sale price of an asset, equal to several points. Thus, opening a deal, the bidder immediately finds himself at a loss. When taking a profit, you need to focus on the fact that the size of the spread must also be added to the set profit level. So, if the profit is at a distance of 100 points from the opening price of the transaction, it will close when the price overcomes not only these 100 points, but also the distance of the spread itself. As for stops, they most often close the previously set level exactly by the spread.

Canceling Orders

Every trader should be aware of the existence of such a thing as pending orders on Forex of a mutually cancelable type. They are also known as OCO or One Cancles Others. The essence of such orders is that they are set in opposite directions. When one of the orders is activated, the other one is automatically cancelled. Stops and profits can serve as a striking example of mutually canceled orders. When one of them is executed, the second is instantly closed. Working with this type of orders is very effective from the borders of the price channel. One order is placed in the inner part of the channel and is focused on a rebound, and the second - behind the level of the channel, on its penetration. When using standard orders, there is a high probability of getting two negative trades as a result. Unfortunately, working with this type of orders is not adapted to either the MT4 terminal or the pending orders advisor. According to experts, this format of decrees significantly complicates life.beginners.

What are Forex Expert Advisors for trading orders?

Today there are many different types of automated trading indicators. The most common Forex advisor among traders, which works with orders, is known as Burn. It installs two oppositely directed orders starting from the beginning of the trading session. Stops and profits are set automatically after the order is activated and after the price has already moved to the breakeven level. A pending order is placed on hourly timeframes. However, there are traders who experiment on smaller time frames. The profitability of such a system is variable, but, according to its users, it reaches 2% per day. Opening pending orders is a great opportunity for all traders to avoid mistakes due to impatience. The use of this trading format is practiced in many trading systems and allows you to achieve good results.