In forex trading, pending orders are the fundamental tools that enable automated transactions to exit or enter the market by setting predefined conditions. The team of JustMarkets created this guide for those who continuously need help to monitor the markets. However, it ensures that trading opportunities are noticed.
Generally, a pending order is an instruction to execute a trade at a specified price level in the future, different from the current Marketplace. This mechanism allows traders to implement and plan strategies without constant market observation.
Types Of Pending Orders
Primarily, there are four types of pending orders in Forex trading explained by JustMarkets:
Buy Limit Order
Buying a currency pair at a lower price contrasts with the current marketplace. It is used when traders anticipate that the price will decline to a certain level before rising again.
Sell Limit Order
Selling a currency pair at a higher price compared to the current marketplace. It is used when traders expect the price to increase to a certain level before falling.
Buy Stop Order
Order to buy a currency pair at a higher price than the current marketplace. Traders use it when they believe the price will continue rising after reaching a specific level.
Sell Stop Order
An order to sell a currency pair at a lower price than the current marketplace. They use it when they expect the price to keep falling after hitting a certain level.
Advantages
Pending orders enable traders to automate their trading strategies, even when not monitoring the market. Also, by setting specific exit and entry points, traders can reduce the chances of spillage and achieve more precise trade execution. Moreover, pending orders facilitate effective management by controlling exposure to market volatility.
Disadvantages
Despite that, there are disadvantages to using pending orders, such as the market needing to reach a specific price, leading to missed trading opportunities. In volatile markets, pending orders can experience slippage, and that discrepancy can affect trading outcomes. Sometimes, brokers impose restrictions that hinder the execution of specific trading strategies. Pending orders remain untriggered for a long duration but, if not managed properly, can be executed during unfavourable times. Understanding these disadvantages is crucial for traders to incorporate strategies into pending orders.
Implementing Pending Orders With JustMarkets
JustMarkets provides a user-friendly platform for traders to manage pending orders more efficiently. The process involves selecting the desired currency pair, determining the type of pending order, specifying the trade volume, and setting the target price. Additionally, traders can set Take profit and Stop loss levels to manage risk effectively.
Practical Tips For Using Pending Orders
Here are some essential tips for using pending orders:
Consider the marketplace: Conduct a fundamental and technical analysis to determine the price levels for setting pending orders.
Set expiry dates: For pending orders, define expiry dates to ensure they are executed within a specific time.
Regular Monitoring: Monitoring the marketplace regularly and adjusting orders as necessary is essential.
