Forex pending orders are used to execute a transaction – not at the current price of an asset, but at a fixed price. Forex pending orders automate the process of trading and allow traders to remain in the market while being away from their computers or mobile devices.
When a trader sets a Forex pending order, they indicate to their broker their preference for the order to be executed only when the market price reaches the specific level, rather than at the current market price.
Forex pending orders are used to automate the process of trading and allow traders to remain in the market while being away from their computers or mobile devices. Photo: Tech Daily/Unsplash
What are the Types of Forex Pending Orders?
There are four types of Forex pending orders. These include the following categories that Forex traders could consider:
Buy Limit: This order is used when a trader wants to buy a currency pair at a price lower than the current price. It allows the trader to enter a trade at a better rate than the current market offers.
Sell Limit: When a trader wants to sell a currency pair at a price higher than the current price, this is one of their options to enter a trade at a more favourable rate.
Buy Stop: This is a viable option when a trader wants to buy a currency pair at a price higher than the current price. It is typically used to enter a long position when the price breaks a resistance level.
Sell Stop: Traders use these Forex pending orders to sell a currency pair at a price lower than the current price.
What are the best ways to use Forex pending orders?
Start by opening the “New Order” window on your trading platform and selecting the currency pair, volume, Stop Loss, Take Profit levels, and specify the execution type as a pending order.
Following this, you will need to choose the type of Forex pending orders (Buy Limit, Buy Stop, Sell Limit, or Sell Stop) from your drop-down list.
Once this is done, specify the price at which you want the order to be executed. You have the choice to set an expiry time for the order.
When you are ready, click “Place” to confirm and set the pending order.
You can also modify your Forex pending orders if you want to change details in the future or adjust your parameters.
What are the Benefits of Forex Pending Orders?
- Automation and convenience
Pending orders allow traders to automate trade execution, setting specific entry and exit prices without the need for constant monitoring of the market.
- Accuracy
Traders can avoid entering trades at unfavourable prices caused by market volatility or slippage, ensuring precise entries and exits.
- Better risk management
Traders can set stop-loss and take-profit levels along with pending orders to define their risk-reward ratio, helping to limit potential losses and lock in profits.
Conclusion
Forex pending orders allow traders to better follow their trading strategies. They can make better-informed decisions, and steer clear of emotional trading that could hamper their trading success.
