Types of Forex trading positions
In financial market terminology, the word "order" is often used to denote a trading order.
Experienced traders often substitute this term for "position."
Depending on the direction of the transaction, positions are divided into long (purchase of an asset) and short (sale of an asset); by duration, transactions can be short-term or long-term; by opening time, they can be urgent or deferred.
Orders that can be opened in the trader's trading terminal are based on this classification.
1. Buy (long position) - purchase. This type of transaction is intended for purchasing a selected financial instrument. A Buy order should be opened if the trader's forecast predicts an upward price movement.
2. Sell (short position) - sell. Orders of this type should only be considered if the trader expects a downward price trend for the selected financial instrument.
Sell and Buy orders are the most common among short-term traders. Opening such orders involves buying or selling a financial instrument at market price and immediately opening the order.
However, the functionality of modern trading platforms doesn't end there. Every trader can now open trades at any price.
The order will be executed when the chart reaches the price level specified by the trader. Such market orders are commonly referred to as pending orders.
Types and features of pending orders
Pending trading orders are divided into 4 types:
1. Buy Limit - a buy order at a price below the market value of a financial instrument. This order is advisable to consider during a downtrend.
The entry price in this case is the potential minimum, after which the trader expects a trend reversal or a prolonged correction.
2. Buy Stop - a buy order to buy an asset at a price above the current market value. It is placed above the local maximum.
According to proven technical analysis rules, when a chart breaks a strong resistance level, it indicates a continuation of the uptrend.
3. Sell Limit - open a sell order at a price above the current one. Placing this order makes sense during an uptrend, which, upon reaching a certain level, the trader expects to reverse due to fundamental factors.
4. Sell Stop - a sell order with an entry price below the market value. It is placed 5-7 points below a strong local minimum (support level), the overcoming of which will indicate the development of a downward trend.
Using pending orders in trading has a significant impact on profitability. Beginner traders avoid this tool because market noise can cause a false breakout of an important price level.
This will trigger the pending order and, consequently, losses. No one is immune to this market phenomenon.
In fact, for many successful traders, pending orders are an integral part of profitable trading.
A key mistake made by novice traders is identifying local levels on low timeframes, which leads to false triggering of pending trading orders. If you determine support and resistance levels on H1 or H4 timeframes, the probability of a false breakout decreases to 10%.
For a more accurate determination of the most significant price levels, it is recommended to use Bill Williams fractals or cluster charts.
Pending Order Strategy - http://time-forex.com/strategy/strategiya-otlozhennykh-orderov
Advisor using - http://time-forex.com/sovetniki/sov-doudlepro
