Knowing how to place a pending order when trading on the Forex market is essential. The main advantage of pending orders is that the broker will open a trade according to your request regardless of whether the trader is at the terminal or not. Let’s take a closer look at what pending orders are, their types, advantages, and disadvantages.
The essence and features of pending orders on Forex
To begin with, let’s clarify the difference between a market order and a pending order. A market order is a position opened by a Forex broker at the current market price. A pending order is an order that the company will open when the price reaches the level specified by the trader in advance. This is the difference between them.
Pending orders, also known as ‘pendings’ or ‘pending orders’ in trader slang, are otherwise no different from market orders. They also have volume, stop-loss, and take-profit levels, and there is no limit to their quantity. Additionally, for pending orders, you can set a date and time after which the order, if not executed, will be automatically deleted.
Pending orders are set through the same order panel as market orders. To do this, select ‘Pending Order’ in the ‘Type’ tab, and then the specific type of the order.
It should be noted right away that another feature of pending orders is modification. All parameters set by the trader can be changed or the order can be deleted entirely. This is done as follows: all pending orders are displayed in the ‘Trade’ tab below already opened orders under the line ‘Balance’. Right-click to bring up the context menu, and select ‘Modify or delete the order’.
In the modification menu, it is possible to change the execution price of the order, stop-loss and take-profit levels, as well as the date and time after which an unexecuted order will be automatically deleted. These parameters can be changed.
Types of pending orders on Forex
Pending orders implemented in the MetaTrader4 trading terminal can be divided into two types.
Pending orders of Stop type
- BuyStop
- SellStop
Pending orders of Limit type
- BuyLimit
- SellLimit
For clarity, Stop-type orders are trades at a price always worse than the price at the time of placing the order. That is, the sale will be opened at a lower rate, and the purchase at a higher rate than at the time of placing the order. In other words, the BuyStop order is always above the current price, and the SellStop order is always below the current price.
Limit-type orders are trades at a price always better than at the time of placing the order. That is, the sale will be opened at a higher price, and the purchase at a lower rate than at the time of placing the order. In other words, the BuyLimit order is always below the current price, and the SellLimit order is always above the current price.
Let’s consider each pending order individually.
Pending Order SellStop
Suppose there is a range in the EUR/USD pair. The price is within the channel, but we expect a break below the channel’s lower boundary at 1.2728 and a continued downward movement. We cannot sit at the terminal all the time waiting for this event, so we instruct the Forex broker to open a short position on our behalf. For this, we set a pending order. Which order should we set? Follow this plan:
- Sell – so we need a Sell order.
- Current rate – 1.2771. The price at which we will sell after the break of the lower channel boundary – 1.2700. The price at which we plan to sell (1.2700) is worse than the current price (1.2771), so the sell order is placed below the current price, which means we need a Stop order.
- As a result, we get a pending order SellStop at the level of 1.2700.
When opening the pending SellStop order or during subsequent modification, set the stop-loss and take-profit levels. As a result, we get the following: regardless of whether we are at the terminal or not, our Forex broker will open a short position when the price reaches 1.2700 with the set stop-loss and take-profit parameters.
Pending Order BuyStop
Take the same situation with a range in the EUR/USD pair. The price is within the channel, but we expect a breakout of the upper channel boundary at
FAQ
What is a pending order in Forex trading?
A pending order is an instruction to a broker to open a trade when the price reaches a specified level, even if the trader is not actively monitoring the market.
What are the types of pending orders?
The main types are BuyStop, SellStop, BuyLimit, and SellLimit, which are used to enter trades at specific price levels relative to the current market price.
Can pending orders be modified or deleted?
Yes, traders can modify or delete pending orders through the ‘Trade’ tab in their trading platform, adjusting parameters like price, stop-loss, take-profit, and expiration time.
