Beginner Level

Learn basic topics about forex, platforms and trading.
If you are new to the markets, start here.

Lesson 11: MT4: Pending Orders

When trading the financial markets, there
are two main ways to open a trade.

Instant
execution:
your trade will be opened instantly at
the price available

Pending
order:
your trade will be opened when the market
reaches a specific level selected by you

Over time, you will probably find that you
use both types of transactions in your business. But how exactly are the
pending orders working, and why are they needed?

The truth is that it is important to always
be up-to-date with market news and big changes, but good planning is even more
critical. If you have your own opinion about a particular market, but don’t
have the time to keep track of prices manually, pending orders may be a good
solution.

Unlike instant execution orders where
trading is made at the current market price, pending orders allow you to set
orders that are opened when the price reaches the particular rate chosen by
you. There are four types of pending orders available within MT4, but we can
group them into just two main types: orders that are expected to break a
certain market level or orders that are expected to bounce back from a certain
market level.

Buy
Stop

Buy Stop Order allows you to set a buy
order above the current market price. It means that if the current market price
is $20 and your Buy Stop is $22, a buy or “long” opportunity will be open as
soon as the market hits that price level.

Sell
Stop

Sell Stop Order allows you to set a selling
order below the current market price. So if the current market price is $20 and
your Sell Stop price is $18, a sell or “short” position will be available as
soon as the market hits that level.

Buy
Limit

The opposite of a buy stop, the Buy Limit
Order allows you to set a purchase order below the current market price. It
means that if the current market price is $20 and the Buy Limit price is $18, a
buy opportunity will be available once the market hits a price level of $18.

Sell
Limit

Ultimately, the Sell Limit Order allows you
to set a selling order above the current market price. So if the current market
price is $20 and the fixed Sell Limit price is $22, then once the market has
reached a price level of $22, a sell opportunity will be opened on this market.

Opening
Pending Orders

You can open a new pending order simply by
double-clicking the market name on the Market Watch page. Once you do this, the
new order window should open and you can then assign the order type to
“Pending order.”

Choose the market level at which the order
will be triggered. You can also choose the size of the position based on the
volume. You may even specify the expiry date (‘ Expiry’). Once all these
criteria are set, choose the preferred order type depending on whether you want
to go long or short and stop or limit, and then select the “Place” button.

Pending orders are very useful when you
can’t constantly monitor the market, or if prices fluctuate and you don’t want
to miss an opportunity.