Easy Strategy Using Pending Orders in Trading
The pending order strategy has gained popularity among futures market traders. This situation is due to the high efficiency of the working tactic, which allows it to reduce the psychological stress of market traders and to open profitable positions in conditions of sharp price changes. With the help of this strategy, the probability level of a forex trade can be increased several times. This strategy can be used by beginners, as well as professionals in order to increase trading efficiency.
A pending order is an order that will be executed when the price touches a predetermined point, or an order to open a position at a certain price level. The advantage of pending orders which is widely used by traders is that traders do not have to wait too long in front of the computer to open a position.
Easy and Safe Way to Use Pending Orders in Trading
In order to properly use this strategy in a trader's work, the trader should determine a price, at which the order will be executed, the options for stop loss and take profit orders and the duration of the order's existence.
So the pending order strategy is a strategy based on the fulfillment of the following actions:
There are several ways to determine the pending order itself, one way is to determine the basis of the entry point, for this a trader needs to find the minimum and maximum prices reached in a trend that is likely to continue its movement. If the price for some time moves within a price, another method can be used for a trader to be able to set the parameters of an order by expecting a price movement to break through the support or resistance line.
It is also possible to use the method of placing buy order limits and sell order limits. These limits are placed in the hope that the price will reach a certain point, where for the buy limit, the price will be lower than it is now, and for the sell limit higher, and will reverse in the direction of the current trend. For pending buy stop orders, it is expected that the price will continue its movement in a bull trend, which means the price will increase. For sell stops everything is the opposite, where the price must continue its movement in a bear trend and decrease towards the level at which the order was placed.
Another way is to use news. A trader should know in advance about important news that will be issued and place orders higher or lower than the current price. Based on the confirmation of the news, the trend will continue its movement, or vice versa, a reversal will occur. Under no circumstances will the order be executed.
Placing a Stop Loss Order
This order is adjusted to the trading strategy of the trader and his financial management.
Placing Take Profit Orders
The parameters depend on the ambitions of a trader and the current market situation of a particular currency pair. Traders should estimate the size of the possible profit and the probability of a trend reversal.
Order Existence Period
This aspect of the strategy overview is very important. The trader must define the time period from which an order expires in order to create a pending order which is executed based on the parameters, which are defined by a trader. On the other hand, the order can be executed regardless of a trader's trading strategy.
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