How to use Pending Orders to make a profit

Exchange trading allows you to open not only forward transactions, but also deferred ones, the opening of which will occur after some time and only if certain conditions are met.

That is, you can give an order to buy a currency if its rate drops below the specified level, thereby completing a transaction on the most favorable terms and without even being present at the trading terminal.

Such orders are carried out using pending orders, which, due to their functionality, significantly expand trading capabilities.

Pending orders are an order from a trader given to a broker to open a transaction, which is not executed instantly, but only when certain conditions arise, namely the required level is reached.

For example, you want to buy US dollars if the price of this currency starts to rise and you place a pending buy-stop order to buy US dollars for Russian rubles as soon as the price reaches 60 rubles per US dollar.

Types of pending orders in the trading platform

At the moment, several types of similar orders are available in the trader's trading terminal:

Buy stop - allows you to open a buy deal if the price continues to rise and reaches a higher level than now, that is, during an uptrend:

Placing this order implies continuation of the uptrend and closing the transaction at a higher price.

Stop loss, when placing a buy-stop, is set below the planned opening price of the order, it will work if the price first rises to the opening price, and then begins to decline, bringing losses, and take profit is higher, it will bring profit after the rate rises.

Sell ​​stop - allows you to open a sell transaction at a given price if the rate declines and is lower than the existing one. In this case, you again plan a trade along the trend:

Placing a pending Sell stop order assumes that the price will reach a certain level and then continue to decline further.

As with other sell orders, the stop loss here is placed above the opening price, and the take profit is correspondingly lower, since completing a transaction with a profit implies closing it at a lower price.

Placing pending orders against the trend

Buy limit is a pending order to buy at a lower price, placed during a downtrend; its meaning is that the trader expects that the price will not decrease constantly, but will reach a certain point and make a reversal. At this moment a purchase will occur and the transaction will begin to make a profit:

The logic of this operation is quite easy to understand using a simple example, you want to buy US dollars for Russian rubles, now the price is 64 rubles per dollar and is decreasing, you decide to buy dollars as soon as the price drops to 60 rubles per dollar.

In the case of buy limit, a similar situation is observed, only the process is automated due to the capabilities of the trading platform.

Since you are buying something, the stops will be set accordingly, the take profit is higher than the purchase price, and the stop loss is lower.

Sell ​​limit - an order to open a sell transaction at a higher price than currently exists, in the expectation that in the future the trend will change its direction and the price will fall, which will allow closing the position with a profit:

This tactic is used in anticipation of a scenario where the price will first rise and then begin to decline; in this case, it is planned that you will open a sell transaction at a more favorable price.

Stop loss and take profit for these pending orders are set as with regular sell transactions - stop loss above the opening point, take profit below.

In the MT5 trading platform, it is also possible to set a Buy Stop Limit and Sell Stop Limit. Read about the features of using these options at the link.

Pending orders are placed quite simply; to do this, in the trader’s terminal, click on the “New Order” tab, in the window that appears, change the “Type” to a pending order, after which some changes occur in the window itself.

Let's move on to choosing the type of order - Buy stop, Sell stop, Buy limit, Sell limit - depending on what goals you are pursuing.

In addition, you can set the lifetime of the order, for example, a day, that is, if the price does not reach the desired indicator within a day, the order is canceled.

Trading using pending orders actually allows you to automate the trading process; at the same time you can place several orders, each of which will have different entry parameters, thereby significantly increasing the likelihood of a successful transaction.

You can find the continuation of the topic in the articles: Tactics of pending orders . Placing pending orders .