The Pending Order Strategy
The pending order strategy has gained big popularity among Forex traders. This situation was caused by the high efficiency of such 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 in order to increase the trading efficiency.
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 order period of existence.
Determination of the entry points. There are several ways of determination. One way is to determine the basis entry points. For this, trader has to spot important price minimums and maximums, upon reaching which, the trend most probably will continue its motion.
If the price for some time moves in one price channel, another way can be used. Trader can set the order parameters with the expectation of the breakdown of the support or resistance line will take place.
Also it’s possible to use the way of placing buy limit and sell limit orders. They are being placed with the expectation that the price will come to the certain 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 continue 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. Trader has to know in advance the time of the important news release and to place the order higher or lower comparing to the current price. Upon the confirmation of the news, trend will continue the movement, otherwise the reversal will take place. In any case, the order executions will take place.
- Placing the stop loss order. This order is placed in accordance with trader's trading strategy and money management. All the advantages and disadvantages can be read in the article "Stop Loss".
- Placing the take profit order. The parameter of it depends on the ambitions of the trader and the current market situation on the certain currency pair. You should estimate the size of possible profit and the probability of the trend reversal.
- Order term of existence. This aspect of the described strategy is very important. You have to define the term of its expiration to make the pending order execute at the parameters, set by the trader. Otherwise, the order can be executed 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.