Pending Buy Limit order
What is a pending Buy Limit order?
Buy Limit Order - this type pending orderThe order is used by exchange traders, which is set on the price chart in advance so that it is possible to buy an asset at a price that is cheaper than the current price level. The slang name for pending orders is "pending orders" or "pendants".
How a Buy Limit order works
The principle of a Buy Limit Order is that the trader plans to buy an asset ALWAYS at a better price than the current price.
Suppose we have an uptrend in the EUR/GBP pair. We assume that in the near future the price will reach the trend support line at 0.7335, form a rebound and continue the uptrend movement.
The current price in the EUR/lb pair is 0.74003. That is, we want to buy at a price which is less than the current price. In a prospective point of a bounce of the price and the pending order Buy Limit is established.
If the price reaches the specified point, the broker will open a buy position, even if trading terminal closed. All pending orders are stored on brokers' servers, which implies entering the market at a clearly specified price, if there is no slippage.
How to set a pending Buy Limit order?
1. In the trading terminal MetaTrader 4 the Buy Limit order is set through the same orders panel, as the market order. For this purpose in tab "Type" it is necessary to choose "Pending order", and then - the type of the pending order itself - Buy Limit.
2. Having established the demanded price of opening, it is necessary to press "Set Order", after that the pending Buy Limit order will appear on the chart and in a tab of the terminal.
3. now for the established order Buy Limit it is necessary to set stop loss and take profit orders. This is done as follows. All pending orders are displayed in the tab "Trade" below already open orders under the line "Balance". Click the right mouse button to open the context menu and select "Modify or Delete Order".
In the menu of the modification it is possible to change the price of the order execution, stop-loss and Take ProfitThe order will be automatically deleted, as well as the date and time after which the failed order will be automatically deleted.
Example: Going back to our example, we set a stop loss under the previous price low (0.7185), a take profit at the trend resistance line (0.7715) and set a time and date to automatically delete the order (22.00 09.10.2015) if it is not open.
What is the difference between a Buy Limit order and a Buy Stop order?
It is easy enough to distinguish a Buy Limit order from a Buy Stop order:
- a Buy Limit order is ALWAYS a purchase at a price better than the current one. That is, the Buy Limit order is set when we assume that the price DOWNS to a certain level and resumes growth.
- the order Buy Stop is always a purchase at the price WEAKER than the current one. That is, a Buy Stop order is set when we assume that the price will Rise to a certain level and continue to rise.
Even if you are a beginner, the MetaTrader 4 terminal will not let you confuse pending Buy Limit and Buy Stop orders. If you try to set a Buy Limit order in the orders panel at a price worse than the current one, the terminal will not let you do it, displaying the following message:
There is also another way. To do so, right-click on the price chart and select the "Trade" tab. Depending on whether you clicked above or below the current price, the terminal will show the pending orders available for installation:
Right-click below the current price. Available pending orders: Buy Limit and Sell Stop
Orders are available for installation:
- Buy Limit - buy at a BETTER price than the current one;
- Sell Stop - sell at a price Worse than the current price.
Right-click on the mouse above the current price. Available Sell Limit and Buy Stop pending orders
Orders are available for installation:
- Sell Limit - sell at a BETTER price than the current price;
- Buy Stop - buy at a price that is WAY worse than the current price.
A pending order set in this way can be modified by setting the desired opening price, stop-loss and take-profit levels.