The pending order strategy has gained high popularity among Forex traders. This situation was caused by the high efficiency of such a work tactic, which allows to reduce the psychological pressure on the market participant and to open profitable positions in the situation of the sharp price changing. With the help of this strategy, the profitability from the Forex trading can increase in multiple times. It can be used by newbies, as well as by the professionals to improve trading efficiency.
Location of the indicatorin the terminal
How to Use Pending Order Strategy Effectively
To use this strategy correctly in your work, you should determine the price, which would cause the order execution, options of the stop loss and take profit orders and the period of order existence.
Types of pending orders
So, the pending order strategy is based on the fulfillment of the following actions:
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Determination of the entry points. There are several ways to determine them. One way is to determine the primary entry points. For this, a trader has to spot the essential price minimums and maximums, upon reaching which, the trend most probably will continue its motion.
If the price moves in one price channel for some time, the trader can set the order parameters with the expectation of the breakdown in one of the directions. Sometimes it makes sense to put the pending orders with the hope that the support or resistance line will break down.
Also, it’s possible to place a buy limit and sell limit orders. They are being placed with the expectation that the price will come to the particular point, wherein for the buy limit the price will be lower than the current one, and for sell limit – higher, and will turn in the direction of the current trend. For the pending orders buy stop, it is expected that the price will continue to move in the bull trend, meaning that the price will increase. For sell stop everything is vice versa, the price has to keep moving in the bear trend and to decrease more towards the level, on which the order is being placed.
The next way is the use of the news. A trader has to know in advance the time of the major news release and to place the order higher or lower comparing to the current price. Upon the confirmation of the news, the trend will continue the movement; otherwise, the reversal will take place. In any case, the order executions will take place.
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Placing the stop loss order. This order is placed following the trader’s trading strategy and money management.
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Placing the take profit order. The parameter of it depends on the ambitions of the trader and the current market situation on the particular currency pair. You should estimate the size of the possible profit and the probability of the trend reversal.
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Order term of existence. This aspect of the described strategy is essential. You have to define the time of its expiration to make the pending order execute at the parameters, set by a trader. Otherwise, the order can be performed not at the trader’s trading strategy.
Considering similar nuances, it is possible to learn how to use the pending order strategy effectively and to increase the results of the Forex trading.
