Pending Buy Stop order
What is a pending Buy Stop order?
Buy Stop order - this type pending orderwhich is a buy position opened by the broker when the price rises to the level indicated by the trader.
How does Buy Stop work?
A Buy Stop order is placed if the trader believes the price will rise to a certain level, usually a resistance level, after which it will continue to rise. In this case the purchase will always be made at a price higher than the current market price.
For example, on the daily chart of the AUD/USD currency pair we observe Double Bottom trend reversal pattern. We assume that in the near future the price will reach the resistance level at 0.7270, will break through it and the pair will start to form an uptrend.
The current price in the AUD/USD pair is 0.71966. The trader wants to buy at a price that is higher than the current price. At the anticipated point of price resistance level breakthrough the pending Buy Stop order is set.
When the price reaches the level specified by the trader, a buy position will be opened by the broker automatically, even if the trading terminal is closed. All pending orders placed by the trader, the broker stores on its servers and makes a purchase at the price specified in the order Buy Stop.
How to set a pending Buy Stop order?
В trading terminal MetaTrader 4 The order Buy Stop, as well as the order of immediate execution, is established through the panel of orders. To set a Buy Stop order in the tab "Type" you need to select "Pending Order", and then the type of pending order to be set - Buy Stop.
Выбрав цену открытия ордера, нужно нажать «Установить ордер». На графике валютной пары появится пунктирная линия, обозначающая уровень открытия ордера, а во вкладке «Терминал» — сведения о нем.
As well as for the order of immediate execution, for the already established order Buy Stop it is necessary to set Stop Loss and Take Profit orders. For this purpose it is necessary to click the right button of the mouse on the established order in a tab "Trade". In the appeared context menu select "Modify or Delete Order".
In the appearing menu of order modification you can change the price of its execution, the values of levels stop loss and Take Profit, as well as set the time and date of automatic removal of an unopened order, if the price does not reach it.
Example: we set a stop loss under the previous price low (0.6890), a take profit at the height of the Double Bottom figure (0.7645) and set a time and date to automatically delete the order (22.00 on 09.10.2015) if it is not executed.
What is the difference between a Buy Stop order and a Buy Limit order?
The difference between the Buy Stop order and the Buy Limit order is as follows:
- The order Buy Stop is a position on purchase at the price HIGHER than the current. The postponed Buy Stop order is established in case of assumptions about growth of the price to any level, its overcoming and continuation of growth of an asset.
- The Buy Limit order is a position on purchase at the price BELOW the current. The postponed Buy Limit order is established in case of assumptions about decrease in the price to any level and renewal of the upward movement.
The MetaTrader 4 terminal is designed so that even a novice trader cannot mix up and make a mistake when placing Buy Stop and Buy Limit orders. If the trader sets an open price for a Buy Stop order that is higher than the current price, the terminal will display an error message.
If you right-click on the price chart of a currency pair, you can see which of the pending orders are available for installation.
Right-click the mouse above the current price
Orders are available for installation:
- Sell Limit - sell at a BETTER price than the current price;
- Buy Stop - buying at a price that is WAY worse than the current price.
Right-click below the current price
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.
In any pending order set in this way, you can make changes to the desired execution price and the values of stop-loss and take-profit.
A pending order set in this way can be modified by setting the desired opening price, stop-loss and take-profit levels.