How to Enter the Pending Order in Your Trade

How to Enter the Pending Order in Your Trade

Submitted by adil on Fri, 03/28/2014 - 14:41

A possible trading opportunity becomes an actual trade only if it achieves a certain price level. It is better to use a pending order instead for kept on staring your computer screens and waiting for that price level to be reached. A pending order is an automatically triggering potential trade but it will be active only once you have attained your chosen price level.

You can place a pending order no matter the market direction is up or down. The following lines explain how you can accomplish the task for the market that is moving up.

Enter a Pending Buy Stop Order for an Uptrend:

You should look to place a pending once you have determined that market is moving up. You will have to set your stop loss, position size, entry price and most importantly profit margin.

• Check the News:

It is absolutely important for you to constantly check for latest news that can positively or negatively impact your trader immediately before or after placing the pending order. In fact, you should never place a trade if news is expected to be released within next few days. Data releases and news can trigger make the trade to reach your stop loss or cause market suddenly change its direction by increasing its volatility. Similarly, you can significantly reduce your risks by closing the trade 5 minutes before the release of any news if you are already in the trade.

• Base Entry Price on Last Up Fractal:

Look for the last fractal and draw a line below the fractal right at the price high. This line represents the setting up price to enter into you pending order as well as the price at which you will place the trade.

The following illustration contains a dotted blue line that expresses the price you will enter into your pending order in MT4. The pending order will enter in your trade automatically when this price level is attained.

• Base Stop Loss on Last Down Fractal:

Now, you will have to draw a line at the tip of the last fractal and this is the place where you will put your stop loss as expressed by a dotted red line the in the following illustration.

• Use Pivot Points to Setup Profit Target:

Take help of entries on your trading chart to spot the next up pivot point and this point will become your profit target. The following graph shows the price you must enter into your profit target.

You need to look for next up pivot point if profit target is less than just 5 pips away. This is to ensure that you maintain an adequate risk to reward ratio and add spread to your target as well.  There will be new sets of pivot points on new day as pivot points change on midnight. In this case, simply adjust your profit target to the immediate next pivot point up. The change will look like this:

• Setup Volume According to Your Account Size:

It is advisable to trade 0.01 lots rounded down for every $100 in your trading account. This rate is actually determined for major currency pairs in which US dollar is the quote currency. For other currency pairs dominated by the currencies other than US dollar, simply use the current exchange rate to calculate equivalent amount of your account in US dollars and base your position on that rate.

For the market whose direction is down, you will use the same procedure to place pending order. However in this case, you will put pending sell stop order instead of buy stop order.