Entry Limit Orders: Buy Entry Limit and Sell Entry Limit - Limit Order in Forex
Limit order definition - Entry limit is an order to buy or sell a Forex currency at a certain price which is a retracement level where price is predicted to pull-back to before resuming the original trend. Traders use them to buy or sell at better market price. These types of orders are available in most online trading softwares, for our example we shall be using the MetaTrader 4 forex platform.
An entry of this type can be used to buy below the market level (up trend market retracement) or sell above market level (downtrend forex market retracement).
Buy limit - When buying, your entry buy limit is executed when market falls to your set price. (retraces down)
Sell limit - When selling, your entry sell limit is executed when market rises to your set price. (retraces up)
Entry orders are placed by traders when they expect price to bounce back after reaching this level.
- Entry Buy Limitbuy at a level below the current market level.
- Entry Sell Limitsell at a level above the current market level.
Buy Entry Limit Example
In the example below, the buy limit order was placed to buy at a price below the current market price. Point B is point at which it was set.
Limit buy order entry placed to buy below current market price
The currency then retraced and went down to hit the buy entry limit, and afterwards the price continued to move upward in direction of the original Forex uptrend. When limit buy order was hit it changed into a buy.
Price hits buy limit, order now changes to a buy
Sell Entry Limit Order
In the example below a the sell entry limit was placed to sell at a price above the current market price. This is the level for the price retracement.
Entry limit sell order placed to sell above current market price
The currency then rallied, went up to hit the sell entry limit, and afterwards the price continued to move downward in direction of the original Forex downwards trend.
Price hits sell limit, order now changes to a sell
When currency quote hit the set level the order changed to a sell, this is therefore a nice method to buy or sell at a better price after a retracement.
Setting Buy and Sell Limit Orders on MetaTrader 4
To set up these Forex trading orders in MetaTrader 4 software, Right-click on Forex chart>>> Choose "Trading">>> Then Select "New">>> Then on the popup panel that pops up (illustrated below), under label "Type" select the option of "pending" instead of "market execution">>> Under pending order options choose the pending order type: for This trade select either "Buy Limit" or "Sell Limit" depending on whether you want to place a pending buy or sell.
Setting Buy & Sell Limit Orders in MT4
Sometimes, setting the point value to place your trade can be tricky, setting to far might mean your entry market limit not getting executed, the best tool to use is Fibo retracement indicator and use the 38.20% retracement levels. This retracement level is watched by many traders and entry orders tend to crowd at this level, therefore the best odds to catch a trade would be presented by using the 38.2% Fibo retracement level.
Fibonacci Retacement Tutorial - Fibonacci Retracement Tutorial
Tip: In Forex online trading, If you want to set a good take profit level (not retracement level, take profit level) for your trades you can use the Fibonacci expansion 100% level for the best take profit area. To Read more on FX Trading Fibo Retracement and Fibo expansion use the right navigation menu section Technical Analysis.
Fibonacci Expansion Tool Tutorial - Fibonacci Expansion Tool Tutorial
