Pending Sell Limit order
What is a pending Sell Limit order?
Sell Limit order - that pending orderwhich allows you to place an order to open a sell trade above the current price. In fact, by placing a Sell Limit order, you want to sell at a higher price than you can now.
Ordell Sell Limit is standard for MetaTrader 4 terminal, it is executed at the price of Bid and it is possible to apply protective orders StopLoss and TakeProfit.
How does a Sell Limit order work?
Having analyzed the situation on the currency market, the trader believes that the price of the asset will rise to a certain level, after which it will resume its decline. In order to sell the asset at the reversal point, the trader sets a pending Sell Limit order. In this case the short position will always be opened at a price BETTER than the current one.
Let's analyze the installation of a Sell Limit order on a practical example. On the H4 timeframe the currency pair USD/CHF is in a downtrend. We assume that the price, according to the laws of technical analysis, will start the correction to the downtrend resistance line at 0.9715, after which it will resume its decline.
Currency pair USD/CHF is trading at 0.9627. We assume the price reversal at the level of 0.9715, that is, we plan to sell at a more favorable price. In a calculated point of the reversal we establish the pending order Sell Limit.
The Sell Limit order becomes an open sell order as soon as the price reaches the value specified in the order. This order is stored on the server of the broker company, so there is no need to keep the terminal open for execution.
How to set a pending Sell Limit order?
В trading terminal MetaTrader 4 both orders of immediate execution, and the pending orders are established by means of the panel of orders which is called by pressing F9 or by clicking the right mouse button on a price chart. In the panel of orders it is necessary to establish the order type (the pending order), then from all pending orders to choose necessary - Sell Limit.
Then it is necessary to set the price of execution of the order. After clicking the "Set Order" button, the set Sell Limit order will appear on the chart and in the "Terminal" tab.
By its structure a pending order does not differ from an immediate order. It also has stop-loss and take-profit levels. To set their values, right-click on the order in the "Terminal" tab. In the pop-up menu select "Modify or Delete Order" and in the window that appears enter the calculated values of Stop Loss and Take Profit, set the time of automatic deletion of the unexecuted order or, if necessary, adjust the opening price of our Sell Limit order.
For our example, we set the stop loss level above the previous high (0.9770), take profit at the trend support line (0.95700) and the time of automatic removal of an unopened order is 23.00 on 09.10.2015.
What is the difference between Sell Limit and Sell Stop orders?
Pending Sell Limit and Sell Stop orders differ as follows:
- A Sell Limit order is always a sell position at the point where the price reverses from rising to falling. The position is always opened at a price BETTER than the current one;
- A Sell Stop order is always a sell position, opened after the price, going down, breaks through a certain level and continues to go down. The position is opened at a price WAY BETTER than the current one.
As a rule, Sell Limit order is mostly used in strategies of rebound from the level of resistance of a flat and downtrend, as well as for corrections of upward movement.
At installation of pending orders Sell Limit and Sell Stop at all desire it is impossible to get mixed up. If to try to establish the Sell Limit order at the price lower than the current one, the terminal will show an error message.