New and more pending order types on MT5
FBS MT5 is now available for all traders of the broker with additional pending order types.
A few more pending orders for traders may sound like a small update but they can be of great help for manual traders in many cases
In this article, we will explain you the basics of MT4/MT5 pending orders and why they are important when trading Forex.
Trader’s secret weapon: pending orders
There are situations when you don’t want to enter the market at the quoted price for different reasons. For example, you know that you can buy a currency pair at a lower price by waiting, or you are not sure where the next movement of the price of the currency pair will go even though you are sure that the currency pair has reached a certain level so you are also sure of the direction of the next movement. . So what can you do? Sit in front of the monitor and wait until the price of the currency pair matches the conditions you want? Of course not. Pending orders created for you.
There are two types of pending orders, namely limit orders and stop orders. Since traders always make a choice whether to buy or sell, it makes sense that there are two types of pending orders: buy limit and sell limit. Stop orders can also be divided into buy stop orders and sell stop orders.
Let’s start with limit orders.
Imagine if you know that even though the price of a currency pair is going down, the price will rise again after touching a certain level. As a result you can place a BUY LIMIT order at the price you think is the turning point for the price (below the current bid price). The feature of this order is that you can buy the currency pair below the quoted price.
On the other hand, there are times when you see the price of a currency pair will rise, but you are not sure that the currency pair will reach a strong resistance level, so the price will fall further. In this case, you can place a SELL LIMIT order above the offered price. The feature of this type of order is that you can sell at a higher price than what was offered.
Note that you can only use limit orders when you expect the support or resistance levels of a currency pair to hold.
What is another type of pending order, namely a stop order?
Stop orders are usually used when a trader expects the price of a currency pair to cross its resistance level or support level.
Imagine if the price continues to rise and you believe if the price touches a certain level then the price will rise again. In this case, you can place a BUY STOP order at a price level above the current offer price.
On the other hand, imagine if the price drops significantly and you have the perception that if the price touches a certain level, the price will fall again. In this case, you can place a SELL STOP order below the currently offered price.
You may ask: why should I use a stop order if the price does not return and just continues its movement in the same direction? I could have bought at a lower price or sold at a higher price. There is a hint here that stop orders are usually used to confirm the accuracy of predictions of long-term price movements of a currency pair. If the price of a currency pair reaches a certain level, then you can be sure that the price will go down, or vice versa the price may reverse before reaching the level you expected.
Tips about pending orders
Important tip: remember if the price does not reach the level you expected on the pending order, then your order will not be opened. A big threat for you to get profit is stored here. You should close the order if the pending order is not successfully opened, or you can forget your prediction and trade by opening the order at the wrong time. One solution for you is to set the expiration time of your pending orders.
In conclusion, we can say that pending orders are the best way to reduce your hard work and time in front of the monitor screen. Pending orders can also help determine the long-term direction of the price of a currency pair and can get you into the market when the best price for a currency pair is being offered. This is the best way to make your trading more accurate and profitable!