What Is a Pending Order in Forex?

12
Share:
Facebook
Google+
Twitter
Pinterest
LinkedIn
Reddit

There are many ways to trade forex, with no right or wrong; good or bad. For every trader’s style and personality, there is a trading method that feels the most comfortable. While market orders are the main type of orders that are traded, bought and sold, another type is called a pending order. Here are some of the things you should know about how to trade pending orders.

How to Set Pending Orders

A pending order, unlike a market order, is set for some time in the future. You can buy and sell a security for a specific price later. Once you set the order, if a price reaches the level that you chose sometime in the future, the trade will be executed. On the other hand, if the price never arrives at your pre-defined level, the order won’t be executed. Following are the four different types of pending orders that you can place.

Buy Limit Pending Orders

A buy limit pending order is the type that allows you to make a trade either at or below your specified price. To make sure that the order will improve the price, limit orders are placed on the right side of the market.  This is when you can buy for a lower price than what is currently being traded. If you are pretty sure that the price has fallen and will increase, the buy limit can be a good choice. Additional step by step forex trading on various topics may be found here

Sell Limit Orders

The sell limit pending order sells after the price has increased. You can specify a sell limit that will predict when a price rises to a specific level so you can take advantage of that increase before the price begins to fall. To ensure that you’ll make a profit here, the order needs to be set at or more than the current market price.

Buy Stop Orders

Buy stop orders are used when you are pretty sure that the current price will grow and even go past a certain level. When placing an order to purchase for a price that is higher than the current market value, it is called a buy stop pending order. When your set price level is reached, which is called the stop level, the order is activated automatically. You don’t need to do anything else. In contrast to the limit order, the buy stop order is set for above the price of the market. Orders are instantly converted into an order once the level is reached.

Sell Stop Orders

To set pending orders to sell for a price that is lower than the current one, it is a sell stop pending order. Once the price reaches that level, the sell order will be placed. This is for times when it seems like there will be a continued reduction of price, after it has hit a certain level.

To use pending orders effectively, you need a clear understanding of which way the market is headed and what might happen in the future.

Share:
Facebook
Google+
Twitter
Pinterest
LinkedIn
Reddit

Comments

comments