Pending Orders Forex
In this article
The concept of pending orders Forex seems a bit complicated for new traders. How to use it or why everyone uses it is less precise than conventional trade orders (market orders).
Pending orders help traders automate the trading process and stay in the market when they are not in front of their forex terminals.
This guide ensures that pending orders are interpreted correctly to use them to speed up your trading strategy.
What do pending orders mean?
Instead, a pending order is an order to buy or sell an instrument if certain conditions set by the trader are met.
In principle, when placing a pending order, the trader informs his broker that he does not want the current market price but only wants to execute his order when the market price reaches a certain level.
Pending orders fall into two main categories, limit orders and stop orders.
List of different types of pending orders
1. Buy Limit-to-buy
This occurs when the future price “Ask” equals the entered value. The current price level is yet higher than the amount of the entered order. This type of order means that the transaction is executed at a price specified in the order or at a lower price.
Orders of this type are somehow placed in the expectation that the instrument’s price, which has fallen to a certain level, will rise.
2. Buy Stop-to-buy
This occurs when the future price of “Ask” equals the entered value. The current price level is lower than the amount of the entered order.
This type of order means that the entire transaction will be executed at a price available at the time of the order, which may differ from the price set by the order.
Orders of this type are often placed to expect the instrument’s price to continue to rise after reaching a certain level.
3. Limit of sell
Sell if the future price “Bid” equals the stated value. The current price level is lower than the amount of the entered order. This type of order means that the transaction is executed at a price specified in the order or at a higher price.
Orders of this type are usually placed in the expectation that the price of an instrument that rises to a certain level will fall.
4. Sell Stop
To sell if the future price of the “Bid” is equal to the stated value. The current price level is quite higher than the amount of the entered order.
This type of order means that the transaction will be executed at a price available at the time of the order, which may differ from the price set by the order.
Orders of this type are usually placed to expect the instrument’s price to continue to fall after reaching a certain level.
Principle of operation of the pending order and its advantages
A pending order begins when the price reaches a predetermined limit: buy – that is, demand, buy – offer.
Simply put, someone buys or sells a currency based on a price you set personally that is more convenient for you to complete the transaction. Pending orders are very popular with large companies because they are described with greater precision.
As a result of such a delay, the following benefits are available:
- Despite large fluctuations in the currency price around volatility, the set opening price will not change.
- You can wait for the speculative market or use the full potential of the news market.
- The ongoing order will be executed immediately, without delay (requotes).
- Automatically open and close the order.
How to enter pending forex orders?
- To enter a pending order in the popular MetaTrader 4 trading terminal, open the New Order via the main menu or the button on the desktop.
- Under Pending Order Type, choose between Purchase Limit, Purchase Stop, Sales Limit, and Stop Sales. Then, if applicable, state the opening price and the order’s expiration date. Then click Place Order.
- The broker will enter and execute your order when the price reaches the set level. You can also add limit orders at once – Stop Loss and Take Profit. In this case, your position opens and closes itself (in SL or TP).
What are other types of orders available on Forex?
1. Market orders
Market orders are the most common orders used in the Forex market. Simply put, it’s just an order to buy something at the current market price. So when you buy something online, the “Buy Now” button does a bit of what makes a Forex market order.
This is because the market order is executed in real-time on the spot. This order will automatically find the best possible price available on the market and book your order at that price.
Just because the prices on the forex market fluctuate so quickly, a market order may be able to execute at a slightly different price than you want! This is a well-known misstep in market terminology.
Slippage can sometimes be traded for the investor’s benefit while trading against the investor. This is because the market order yet immediately becomes an open position. Therefore, gains and losses in this order must be realised at the position’s closing.
2. Profit booking order
Profit book orders are usually orders to quadrate a long open position, i.e., to sell. These orders specify the conditions that must be met before a square can be created.
For example, an order to execute a trade when the Profit reaches 10% when a price increase of 12% occurs is an order to reserve a profit. These orders allow traders to post profits in a market where prices change rapidly, and it can take many hours to enter orders manually.
3. Stop-loss order
The stop-loss order is the opposite of the profit posting order. However, more than a revenue order is used in the markets. The order specifies the low limit that the investor is willing to accept.
If prices fall above this limit, investors sell their assets to minimise losses. So the order to place a long open position when prices fall is called a stop-loss order.
Again, this order will immediately prevent losses by acting much faster than manual action.
4. Trailing stop order
Trailing stop order equals stop-loss order. This means this order is sold in an open position when the price reaches the lower limit.
In this case, however, the floor will increase if there is a win. You enter a trailing stop order 10% below the market price. The next day, the value of your share will increase by 15%.
In the case of a stop-loss order, the price bottom will remain the same, i.e., 10% below the price at which you started trading.
However, the trailing stop order monitors the market price. Therefore, the lower limit will be 10% below the new market price, i.e., the price reaches a new maximum.
5. Dependent orders
The Forex market also allows investors to place dependent orders. This means that an investor can enter two orders simultaneously, and only one of them will be executed based on market conditions.
On the other hand, placing one order may result in placing another order in the future. As a result, dependent statements can be used to design complex algorithms that perform actions with little human intervention.
The forex market is increasingly moving towards using artificial intelligence to conduct trades. Many believe that this is the only way to effectively sell the market as fast as the Forex market and that it works on a 24-to-7 basis!
How do I view pending orders on mt4?
You can open a new order simply by double-clicking on the brand name in the Market Monitor module. Doing so will open a new order window, and you can change the order type to ‘Pending Order.’ Then select the market level at which the current order will be activated.
How do I cancel a pending mt4 order? First, Right-click on the order you want to change or delete and select “Change or delete order,” or double-click on order to bring up the “Order” window.
How can I open a pending order?
To place a new pending order:
Open the “New Order” window in one of the following ways:
The “Order” window opens, where you need to select the currency pair and volume, set the Stop Loss and Take Profit levels and specify the type of execution – pending order.
Relationship between pending order and money management
The money management system is plan-based. This means that the trader already knows how significant the risk is in each trade, the level of entry and exit, and what the next step should be.
The only tricky thing to estimate is the time it will take the trade to reach the goal. If the analysis is incorrect, trading may stop earlier than expected. Even with the proper analysis, the market can take an unexpectedly long time to reach its goal.
Other patterns involve time analysis – such as flags, banners, and even Elliott’s wave theory. However, the best way to manage time and implement a sound money management system is to use pending orders.
Plan your business and sell your plan. This is how it is recommended to use pending orders – to have a plan.
Traders who use the plan have a massive advantage over traders who use a random system. However, creating a plan and implementing it is a very different process.
Patience is the primary key. Depending on the time frame on which the analysis is based, it may take days, weeks, or longer for the price to reach the desired level.
In addition, traders who use pendant orders are always “first on the curve.” This means that the trade market can move in the opposite direction before reacting.
Because the standing order proposes a plan, it helps with the risk management strategy. One of the most significant benefits of using dependent orders is much better to risk management.
In the same vein, by placing a pending order, the trader has a much faster time setting and controlling the risk-reward ratios.
It is known that the minimum risk-reward ratio must be 1: 2, which means that for every $ 1 at risk, the trader has $ 2. Therefore, planning where you must enter and exit makes it easier for the trader to set the appropriate risk-reward ratios.
Another advantage is that it prevents overcharging. When using emerging orders, the market must travel to a certain level. Otherwise, the order will not be completed.
1. How will the pending order work?
In principle, when placing a standing order, the trader informs his broker that he does not want the current market price but only wants to execute his order when the market price reaches a specific level. Pending orders fall into two major categories, limit orders and stop orders.
2. What is the difference between a market and a pending order?
A market order is executed immediately and requires you to be present at execution time. On the other hand, a pending order is set in advance and becomes a market order upon execution.
3. Can you cancel a pending order?
Pending transactions occur when a payment is authorised by your card issuer but has not yet been completed. Pending transactions will affect the amount of credit or funds you have. Cancelling a pending transaction usually requires contacting the merchant who made the payment.
4. How do you trade pending orders?
The “Order” window opens, where you need to select the currency pair and the amount, set the Stop Loss and Take Profit levels and specify the type of execution – pending order.
Now that the persistent commands have been explained to you, it should be easier for you to use them without much difficulty.
It is always advisable to use stop-loss and take-profit orders. However, sometimes, it is wiser to use stop/limit orders to enter positions, especially if you expect the market to follow a certain trend level before it leaves.
Jason Morgan is an experienced forex analyst and writer with a deep understanding of the financial markets. With over 13+ years of industry experience, he has honed his skills in analyzing and forecasting currency movements, providing valuable insights to traders and investors.
Forex Content Writer | Market Analyst