It is true that the Forex market is open 24 hours a day, 5 days a week (from Sunday evening until Friday evening). However, this does not mean that it is necessary to stay in front of the computer all this time to be able to catch the right moment to open a deal.
After all, a Forex trader, like any other person, needs to sleep, eat, rest, and do other things. In order for a trader to open a deal at the price he needs, there are Forex pending orders.
What are Forex pending orders?
Pending orders in Forex are orders that automatically open a trading position at the price level chosen by the trader. When the market price of the currency matches the price specified in the pending order, the transaction will be immediately opened.
Thanks to such an order, you can determine the conditions for opening a trade in advance, without waiting for these conditions to be implemented on the market.
Generally, these are all the main differences between a pending order and a regular order with instant execution. In the same way, as in a regular order, you can secure your trade in a pending order by placing take profit and stop loss orders.
A trader is practically unlimited in his actions with pending orders – the main thing is to determine the correct parameters for placing it and choose the right distance from the current price to the desired one.
Types of pending orders in Forex
These are the 4 types of Forex pending orders used to trade at a price different from the prices actively traded in the market.
Buy-stop
This type of order is used to enter a buying transaction at a price that is even higher than the price currently traded in the market. This statement may sound a bit contradictory to you. “While it is more profitable to buy at a lower price in trading, why should we choose to buy above the price with a buy stop?” You can ask a question like If you believe that the determined resistance point is broken, the market will go higher, you can easily use this order. If you do not want to buy in case the resistance is not broken, by placing a buy stop order, you will automatically start buying when the price level you have determined is reached.
Buy-limit
The buy limit is the type of order that is given when the price is lower than its current state when the purchase is requested. When placing this order, investors think that the prices will fall to the level they want and that the price will rise again after the order. Support points on the chart are vital for this order.
Sell-stop
Such an order is used to sell the currency you need already when it starts to get cheaper. It is usually used when the trader is sure that after his deal to sell the currency will continue to decline in price.
Sell Limit
This is an order that is placed to complete a sell transaction at the moment when its quotes reach a higher level. In other words, when the trend is already close to its peak, and soon the price of the currency pair will probably already go down, such a pending order should work to start selling the currency while it is still quite expensive.
The advantage of pending orders is that if the price of the currency does not reach the level you need, you will not lose anything. You will simply need to delete your order or move it to another place. But if you opened a regular, urgent order, then if the price goes in an unnecessary direction for you, your transaction would close with a loss. So we can say that a pending order is a kind of risk protection for your deposit.
How to place Forex pending orders with MT4 & MT5
It is possible to set Forex pending orders using the MT4 and MT5 trading platforms.
How to enter Forex pending orders in MT4
First, you need to open an order window in your MT4 trading software.
After double-clicking on any pair in the market watch, you can select the pending order in the type section.
If you want to buy at a price above the market price, you must select the buy-stop order.
In the price section, you can enter the price level you want the order to be executed, and in the validity section, you can specify how long you want the order to be active.
If you want to enter a trade at a price below the market price, you should use the buy limit, if you want to sell at a price above the market price, you should use the sell limit, if you want to sell at a price below the market price, you should use the sell stop options.
As an example, let’s take the market value of the GBPUSD pair as 1.56. In order to write a buy order at a better price, you can choose the buy limit type and enter the 1.55 level. To write a sell order at a better price, you can select a sell limit and place an order at 1.57. If you think the market will go higher, you can buy 1.57 using the buy-stop order. If you think the market will fall more, you can place a sell order at 1.55.
How to enter Forex pending orders in MT5
- First, log in to your MetaTrader 5 account.
- In the top menu, you have to click on “See” and then on ” Market Watch”
- Then, you have to go to “symbols” and write the chosen resource in the search bar
- Once found, click on “Show symbol”.
- Then drag the symbol from the “Market Watch” window onto the graph.
- Once the chart is open, you can do technical analysis and place pending orders as you need.
You can follow all these pending orders we have given from the trading window.
Conclusion
We have therefore carefully seen what Forex pending orders are, their types, and how they can be used in Forex trading.
Is it important to use pending orders in Forex or can we do without them?
From our point of view, pending orders are essential, if not so much to open a position when a certain price is reached, at least to close it in the form of a stop loss or take profit, which are two basic concepts for success in trading currency market.