A simple strategy using pending buy and sell limit orders
Trading using pending orders is one of the most common strategies.
In most cases, traders use buy and sell stop orders in their trading since they involve opening transactions along the trend.
At the same time, limit pending orders are not so popular due to the complexity of their application.
In reality, most traders simply have no idea in what cases to use this tool.
And calculating entry points in this case is quite complicated and requires some effort before placing a limit order.
The first option is suitable for those who decide to trade on the news.
It often happens that you launch a trading platform and see that, under the influence of news, one of the assets began to grow sharply.
But it’s too late to enter the market, since the news that caused the growth came out quite a long time ago, and the price has already reacted to the event. In this case, one of the options is to wait for the correction to start and set a buy limit :
This order will make a purchase after the price drops to the level you set. At the same time, it is important that the upward trend remains in the market and that the correction does not turn out to be a trend reversal.
The difficulty of this method lies in finding the entry point, because it is impossible to predict the exact size of the correction, unless there is a support line nearby, from which the price will push off and go up again.
The second option is simpler and to some extent safer.
When using it, limit pending orders are placed at the boundaries of the price channel: The main thing is that the price moves for some time within the boundaries of this price channel:
For work, it is better to use higher timeframes , ideally when you can create a horizontal channel.
It’s even better when placing orders to focus on strong levels, near which the price most often makes a reversal.
The strategy using limit pending orders is quite risky, so do not forget to set a stop loss immediately, since after the order is triggered, the price may move further against an already open position.
In this case, the size of the stop loss will have to be set so that a false positive does not occur, since it is difficult to accurately calculate the reversal point of the correction.
To be completely honest, I myself prefer to use pending orders like buy stop sell stop, it’s much simpler.
A brief description of the strategy on stop orders can be found here - https://time-forex.com/strategy/strategiya-otlozhennykh-orderov