Buy limit.

Working with pending orders has always brought good profits, but in order to correctly use this trading tool, you should know the types of pending orders. One of these types is a buy limit order.

Buy limit – represents an order to buy below the current price level. That is, you give an order to buy a currency after the price drops to a certain value.

It is assumed that a buy position will be opened after the so-called trend correction has passed and the price of the currency pair will begin to rise again and bring the planned profit. The essence of this operation is a little difficult to understand, so let’s look at it in detail.

An example of placing a buy limit order.

At 16-00, the exchange rate of the currency pair is at the level of 1.3463 and is gradually decreasing, let one of the levels be 1.3440 for it and place our buy limit order.

If our assumptions come true, then the price in this particular place will go up again. In addition, do not forget to place stop loss and take profit orders, the size of the latter will be set to 15 points.

The figure shows how the rate dropped to the level where the pending order was triggered at 16-30, and after that the price moved a little more in the same direction and began to grow. At 17-00 our take profit order is triggered and the deal is closed with a profit of 15 points.

Here is an example diagram for setting a pending buy limit order.

Usually, to place this type of order, a longer time period is used than M30, but in addition to increasing the possible profit, there is also a risk of not guessing the price reversal.

The tactic is used if the size of the correction can be calculated in advance and the direction of the main trend on a higher time frame is known.

Orders are placed during a rollback on lower time periods. One of the main conditions for successful trading when working with this order is the correct determination of the reversal point and the installation of stop orders.
stop loss size will lead to its early triggering, and a large take profit size may not allow you to make a profit until the next correction.

The minimum value of this order is often set in the trader’s terminal; usually it cannot be set closer than 10-15 points from the current price, so be careful when setting it.

Trading using buy limit is quite complex and therefore when trading it is easier to use pending orders like buy stop .