Pending order strategy
Forex trading strategies using pending orders are one of the most profitable trading options on the currency exchange; they allow you to partially automate the process of opening orders and relieve the psychological burden on the trader.
They are based on placing pending orders at a certain price level, upon reaching which a transaction will be opened.
You can also pre-set additional conditions, upon reaching which the open position will be closed.
In the trading terminal, it is possible to set several options for a pending order and set its lifetime.
The pending order strategy is highly profitable and efficient, most of these transactions are closed with a positive result, this trading method works one hundred percent.
In this article, I'll discuss some technical aspects and reveal the secrets of practical application of the pending order strategy.
Types of pending orders.
Your trading terminal allows you to open two types of pending orders: stop and limit. Each type is designed for a specific trading strategy.
Limit – implies opening a trade against the direction of the main trend, that is, if the price falls or rises above the existing value.
This type of order is quite difficult for a novice trader to understand, and it is better to consider this option using a specific example.
Example : the price of the EUR/USD currency pair is 1.2355, the market is in an uptrend, you place a pending buy limit order at 1.2300, the price rolls back to the desired level and the position is opened, the rate begins to rise again and then reaches its previous value.
As a result of this trade, your profit will be 55 pips.
The strategy is based on trend reversals and opening trades at the most opportune points, allowing you to maximize your profits or lose your deposit if the price reverses.
Stop is a more straightforward type of pending order; you open a trade based on the direction of the trend or price movement within a price channel.
For example , the currency pair chart clearly shows the price gradually moving upward, but it's unable to break through the $1.2400/euro level. This could only happen if some important event is announced. If this happens, the trend will definitely increase by more than 100 pips.
We place a buy stop order at 1.2305 and wait for the trend to cross the target level, then close the position with a profit.
To protect yourself from completely losing your deposit, set stop-loss and take-profit orders at the same time.
Stop-loss is the maximum acceptable loss level; for example, if you are willing to lose no more than 20 points from one trade, this is the value we specify.
Take profit – we set it in the area of possible profit, it is clear that the new trend is unlikely to continue for more than 50-100 points, so there is no need to be greedy, I usually set a take profit of 20 points.
Pending Order Strategy for Channel Breakout
A well-known trading strategy based on price channel breakouts, its main advantage is its simplicity and the lack of need to constantly monitor the chart:
To use it, it is enough to build a simple price channel and place two orders outside its boundaries: buy stop and sell stop. When placing these orders, it is advisable to limit the time of their execution.
This means the order should only trigger when the price jumps, and not two weeks later when the price gradually reaches the order level, as it is only in the event of a breakout that you can actually make money.
The pending order strategy is based on data analysis of future developments in the Forex market. The success of your trades will depend on how accurately you calculate potential scenarios.
