FOREX PENDING ORDERS: How and When to Use it Profitably..

Whether you are a new or an existing Forex trader, the term ‘pending order’ is not strange and has been heard or read countless times.

Its proper use, however, tends to be complicated to the less experienced traders and adequate care will be ensured in this blog post to simplify it into easy-to-understand bits.

At the end of this post, you would get to understand the meaning of pending orders and how you can use it to make money without sleeping on the charts.

So, are you ready? Grab your popcorn, and let’s get started.

What is a Pending Order?

A pending order is an instruction from your trading terminal to Buy or Sell a currency pair or other commodities at a later date when certain conditions (in prices) are met. E.g price is currently @1.1980 and you want to buy at a lesser or higher price later. 

A pending order is the direct opposite of the popular Instant Execution process that you are most familiar with and when you initiate it, you are informing the broker that you do not want to execute your trade at the current market price, but would only do so when the market price reaches a certain level.

Question Time!

  • Now that you understand what a pending order trade is, can you differentiate it from an instant execution trade?
  • When best do you open a pending order trade?

Why Use Pending Order?

Simply put, pending orders help to automate your trading and remain in the market while you are not actually in front of your trading terminal.

This makes it a great tool in the implementation of your trading strategies.

Are pending orders for you? Yes, pending orders are especially for you if you have a busy schedule and seldom have time to analyze the charts all day long.

It is also a go-to tool if you are trying to enter the Forex market at a future price while you go about your daily activities.

From the aforementioned features of pending orders, its use is clearly advantageous as it gives you the privilege of entering the market at your intended price, right to the last cent.

You get to automatically activate your trades at the exact prices you are gunning for and secure profit while you attend to other important things.

Sounds like techy stuff, right? Yeah, somewhat.

Now that you know the “what” and “why”, it’s time to learn “how” pending orders works and how to set it up. Proceed to answer the question below and let’s dive right into it!

Question Time!

  • What are the advantages of opening a pending order over an instant execution trade?

 

Types of Pending Orders and How They Work

Pending orders are of varying types and the type to be applied largely depends on the prevailing market situation or the aim to be achieved. (This is the juicy part, you don’t want to miss!)

Pending orders are of four types, and their respective meanings and conditions of usage are briefly but accurately explained below with simplified examples and a setup guide.

BUY LIMIT

This is used when you want to buy a currency pair at a level that is below the current price.

As an instance, let us assume that the EUR/USD pair is currently trading at a price level of 1.2388 and you believe that it can drop further to as low as 1.2310, and rise afterwards.

Of course, we know you would want to place a buy order immediately the market hits the 1.2310 price level. We would too!

Instead of hanging around and watching the chart go down pip by pip, all you need to do is use a Buy Limit pending order, and a buy position is automatically triggered at the 1.2310 price level.

Follow the steps in the images below to learn how to set up a Buy Limit order. 

Untitled design (6) (2)     Untitled design (7) (1)

Simply pick the pair and the volume, change your order type to pending order and select buy limit. This should then allow you to insert your intending buy price, TP and SL. Viola! Your trade is waiting to activate. 

Cool, right? This saves you time and enables you to enter a trade at a better rate than currently available.

SELL LIMIT

On the other hand, a Sell Limit pending order should be used when you want to sell a currency pair at a level above the current price.

As an instance, assume a scenario in which the GBP/USD pair is trading at the 1.4531 price level and you believe that the currency pair will go down after it hits the 1.4700 price level.

To instruct the 7BForex Broker to automatically enter a sell position at the 1.4700 price level while you are not there, all you need to do is use a Sell Limit pending order.

Just like a buy limit order, a sell limit order lets you enter a trade at a price higher than the current market price.

Follow the steps in the images below to learn how to set up a Sell Limit order. 

Untitled design (9) (1)     Untitled design (10) (1)

Simply pick the pair and the volume, change your order type to pending order and select sell limit. This should then allow you to insert your intending buy price, TP and SL. 

BUY STOP

The Buy Stop is a pending order to buy a currency pair at a level that is above the current price.

As an instance, assume a scenario in which the USD/JPY pair is trading at the 92.46 price level and you believe that an upward trend will be triggered when the currency rises to the 92.55 price level.

To instruct the broker to automatically buy at the 92.55 price level while you are busy snacking or watching your favorite show, all you need to do is initiate a Buy Stop pending order.

With this type of pending order, you always enter at a lower than the current market price.

Follow the steps in the images below to learn how to set up a Buy Stop order. 

Untitled design (12) (1)      

Simply pick the pair and the volume, change your order type to pending order and select buy stop. This should then allow you to insert your intending buy price, TP and SL. 

SELL STOP

The Sell Stop is a kind of a pending order used to sell a currency pair at a level that is below the current price.

As an instance, assume that the EUR/JPY pair is currently trading at 114.28 and that a strong bearish movement will be triggered when the pair declines to 113.40.

If you want to automatically open a sell position at the 113.40 price level, a Sell Stop pending order should be placed.

A sell stop order implies that you are ready to sell at a price below the current available price.

Follow the steps in the images below to learn how to set up a Sell Stop order. 

How_To_Set_Sell_Stop_Image_1      How_to_Set_Sell_Stop_Img_2

Simply pick the pair and the volume, change your order type to pending order and select sell stop. This should then allow you to insert your intending buy price, TP and SL. 

So, What Next?

Now that you know the different types of pending orders and the various conditions necessitating their application, it’s time to go practical and set those pending trades ahead of the week.

Have you got questions on pending orders? Let’s hear from you in the comment section. 


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