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 will talk about some technical aspects and reveal the secrets of the practical application of the strategy on pending orders.
Types of pending orders.
In your trading terminal, it is possible to open two types of pending orders - stop and limit, each type is intended for a specific trading strategy.
Limit – implies opening a transaction against the direction of the main trend, that is, if the price falls or rises above the existing value.
This type of orders 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 euro/dollar currency pair is 1.2355, there is an upward trend in the market, you place a pending buy limit order at 1.2300, the price rolls back to the desired level and a position is opened, the rate begins to rise again and now it reaches the previous level meanings.
As a result of this transaction, your profit will be 55 points.
The strategy is based on trend rollbacks and opening trades at the most favorable points, which allows you to get maximum profit or lose your deposit in case of a price reversal.
Stop is a more understandable type of pending orders; you open a trade depending on the direction of the trend or price movement in the price channel.
Example - the chart of a currency pair clearly shows that the price is gradually moving up, but cannot break through the level of 1.2400 dollars per euro; this can only happen if there is a message about some important event. And if this happens, the trend will definitely make more than 100 points.
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.
In order to protect yourself from a complete loss of your deposit, we immediately set the level of stop loss and take profit orders.
Stop loss has the value of the maximum allowable loss level, for example, if you are ready to lose no more than 20 points from one transaction, this is the value we indicate.
Take profit - we set it in the area of possible profit, it is clear that the new trend is unlikely to continue more than 50-100 points, so don’t be greedy, I usually set take profit at 20 points.
Strategy of pending orders for channel breakout
A fairly well-known trading option designed to break out a price channel; its main advantage is its simplicity and the absence of the need to constantly monitor the chart:
To use it, it is enough to build a simple price channel and place two buy stop and sell stop orders outside its boundaries; when placing these orders, it is advisable to limit the time they are triggered.
That is, the order should be triggered only when the price jumps, and not after two weeks when the price gradually reaches the placed order, since it is in the event of a breakdown that you can really make money.
The pending order strategy is based on data from an analysis of the further development of the situation on Forex, and the success of your transactions will depend on how accurately you calculate the possible options.