Beginner traders often overlook whether the current market price is optimal, leading to higher risks and lower profits. Experienced traders mitigate this by using pending orders (also called limit or stop orders). This guide explores these tools in detail, covering execution types, strategic use cases, and practical applications in trading platforms like MetaTrader.
Key Takeaways
- Market Orders: Execute instantly at the current price (Buy/Sell Market).
- Limit Orders: Open trades at predefined price levels—Buy Limit (after a dip) or Sell Limit (after a rally).
- Stop Orders: Trigger when price breaks a level, ideal for trend trading (Buy Stop for uptrends, Sell Stop for downtrends).
- Stop Loss & Take Profit: Essential for risk management—SL limits losses, TP locks in gains.
- Trailing Stop: Automatically adjusts to follow price movements at a set distance (in pips).
- Platform Tools: All order types are available in MetaTrader 4/5 with customizable parameters.
Types of Market Orders
1. Market Orders: Buy and Sell
- Buy Market: Opens a long position immediately at the current price (plus spread).
- Sell Market: Opens a short position instantly.
- Best For: High-frequency trading or when immediate execution is critical.
👉 Master market orders with LiteFinance
Pending Orders
1. Limit Orders
Buy Limit: Set below the current price to catch a rebound.
- Example: EURUSD at 1.2000; place Buy Limit at 1.1950 expecting a reversal.
- Sell Limit: Set above the current price to capitalize on a pullback.
2. Stop Orders
- Buy Stop: Placed above current price to ride a breakout.
- Sell Stop: Placed below current price to follow a downtrend.
3. Stop-Limit Orders
Combines stop and limit features:
- Buy Stop-Limit: Triggers a Buy Limit after hitting a stop level.
- Sell Stop-Limit: Activates a Sell Limit post-stop level breach.
| Order Type | Execution Condition | Use Case |
|------------------|-------------------------------|------------------------------|
| Buy Limit | Price drops to target | Reversal trading |
| Buy Stop | Price rises above target | Breakout trading |
| Sell Limit | Price rises to target | Resistance rejection |
| Sell Stop | Price drops below target | Support breakdown |
Risk Management Orders
1. Stop Loss (SL)
- Automatically closes a losing position at a predefined level.
- Example: Set SL 50 pips below entry to cap losses.
2. Take Profit (TP)
- Locks in profits when price reaches a target.
- Example: Set TP 100 pips above entry to secure gains.
👉 Optimize risk/reward ratios here
Execution Details
- Slippage: Occurs when orders fill at worse prices due to volatility.
- Market Depth: Liquidity affects order execution speed and accuracy.
How to Place Orders in MetaTrader
- Open "New Order" → Select "Pending Order."
- Choose type (Limit/Stop) and set entry/exit levels.
- Assign SL/TP and confirm.
Practical Trading Examples
Scenario 1: EURUSD Rebound Trade
- Action: Place Buy Limit at 1.16250 (support level).
- SL: 1.1590 (below support).
- TP: 1.18250 (resistance level).
Scenario 2: Trend Continuation
- Action: Set Buy Stop above 1.1700 to catch breakout momentum.
FAQ
1. What’s the difference between Buy Stop and Buy Limit?
- Buy Stop: For breakouts (enters when price rises).
- Buy Limit: For reversals (enters when price falls).
2. When should I use a Stop-Limit order?
When you want to control execution price post-breakout (e.g., avoid slippage).
3. How do I set a Trailing Stop in MT4?
Right-click an open position → "Trailing Stop" → Choose pip distance.
4. Can I modify pending orders?
Yes—edit or cancel them anytime before activation.
5. Why did my order execute at a different price?
Slippage due to fast-moving markets or low liquidity.
Conclusion
Pending orders are indispensable for strategic trading, enabling precise entries, risk control, and time efficiency. Mastery requires practice—test strategies in a LiteFinance demo account before live trading.
Pro Tip: Combine limit/stop orders for complex strategies (e.g., breakout + reversal setups). Always backtest!
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2. Limit Orders
3. Stop Orders
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5. Sell Limit
6. Stop Loss
7. Take Profit
8. MetaTrader