Content source: Wechat public account Huiclassroom
One of the most critical steps in foreign exchange trading is placing an order, and each trader is most concerned about his own order.
So, do you place an order directly at the market price, or use the form of "scheduled transaction"?
There are two types of foreign exchange orders, market orders and pending orders. For most non-full-time traders, pending orders are of great help to us both in terms of time and money, so we must have a full understanding of pending orders.
So today Hui Classroom will share with you how to better control pending order transactions.
Whether you are trading with the trend or against the trend, you can use the pending order transaction. Pending order transactions are mainly divided into two types of stop loss orders and limit orders, which are respectively used in trend-following transactions and counter-trend transactions.
Trade with the trend + stop loss order
Trend-following trading pays attention to chasing ups and downs, so the corresponding pending order is naturally to buy above the high point or sell below the low point! This is also a stop loss order. A stop loss order does not refer to a closing order, but a breakthrough transaction.
Stop loss orders are divided into buy stop loss (buy stop) and sell stop loss (sell stop).
A buy stop means buying at a price higher than the current price. When to use this pending order method? It is used in a unilateral upward trend, as shown in the figure below, when the market price breaks through point A, it is considered that the market rise is confirmed, and the price will break through the resistance level. At this time, a buy stop can be set.
Specifically where to set the price, you need to find the resistance level, and the way to find the resistance level can be through the zigzag indicator, the trend line channel combined with the Fibonacci retracement line. A long stop order is placed above the resistance level.
In fact, buying stop loss is a kind of breakthrough transaction in trend trading.
A sell stop means selling at a price lower than the current price. When to use this pending order method? Used in a unilateral downward trend, as shown in the figure below, when the market price falls below point B, it is considered that the market decline is confirmed, and the price will break through the support level. At this time, a sell stop can be set.
Where to set the specific short order, you need to use the support level, and the stop loss order is set above the support level. Find support levels in the same way as resistance levels, with the help of zigzag indicators, trend channels, and Fibonacci retracements.
After talking about trading with the trend, let's talk about the way of pending orders in trading against the trend-limit orders.
Contrarian trading + limit order
Contrarian trading is to sell high and buy low before the price reverses, and the way to place orders is to find effective lows and highs. Buying before the low point and selling before the high point corresponds to the limit order method.
Limit pending orders are divided into limit buy (buy limit) and limit sell (sell limit).
Buy limit refers to buying below the current price. Applied to the bottom reversal trend, as shown in the figure below, when the market price falls below point A, it is believed that the market downward trend will reverse at the support level, and a buy limit can be set at this time.
Where can I place an order? Relying on the support level, a buy limit order is placed above the support level.
Selling at a limit refers to selling at a price higher than the current price. Applied to the top reversal trend, as shown in the figure below, when the market price rises beyond point B, it is believed that the market price will reverse at the resistance level, and a sell limit can be set at this time.
The limit sell order is set below the resistance level, and it is necessary to find the resistance level according to the auxiliary tool.
The above is the end of the introduction of the two types of pending order types stop loss order and limit order. In fact, in trading, whether the market follows the trend or reverses determines whether you use stop loss trading or limit price trading. But whether the final market is as you expected, there is still a certain probability. Therefore, stop loss should also be set for pending order transactions. For the method of setting stop loss, you can refer to historical articles.
Pending order trading is just a trading tool to save time and reduce slippage. In fact, the key to the success of the transaction is to grasp the trend and judge the support and resistance levels. To judge the trend, you can refer to fundamental information, trend lines and channels, trend indicators, K-line patterns, etc. The control of support and resistance levels can use all indicators or technical patterns that can judge high and low points, as well as Fibonacci tools. For details, please refer to the historical article.
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