An order in the form of Pending Order is Buy Limit and its use is completely sold by Sell Limit, both of which are in the Limit Order line and are frequently used by Pro Traders. So what is Buy Limit and how to use it optimally?
To distinguish the types of orders in the transaction, we need to distinguish two types of order settings:
Market Execution: Enter the market directly.
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What is Buy Limit?
Buy Limit is 1 of 4 pending orders (Pending Order) in forex trading.
Specifically, Buy Limit is a pending order to buy, buy at a low price, lower than the current market price.
So why not buy at the current price but buy at a lower price?
Simply then, investors expect to have a better buy point with a better Risk:Reward ratio.
Buy Limit is one of the 4 Pending Orders used by Pro Traders quite commonly.
What is the meaning of Buy Limit order?
BuyLimit order is a pending order in an investor’s pending buy strategy.
Investors are expected to establish a Buy strategy of a product.
But for some reason, investors do not want to enter a Buy order directly at the current market price, but they are expecting the price to drop even lower to be able to buy at a better price, thereby having a higher profitability and less risk.
But in reality, they don’t have much time to constantly monitor the price of the product they are buying.
And so the Buy Limit order will solve them in this case.
If using this Buy Limit order well, investors can increase profits, limit risks, and more importantly, save time “watching” the running price.
How to use Buy Limit order?
Similar to other Pending Order orders, the Buy Limit order is very simple to set up.
You go to MT4 and then press the F9 shortcut to set up a new trading order.
Type item: There are 2 options for 2 types of commands:
Market Execution: enter orders directly at market prices.Pending Order: Enter to set up pending orders.
You choose Pending Order.
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Select Pending Order to set up using pending orders.
It will then display the details of 4 types of Pending Order orders as detailed below.
You choose “BuyLimit”.
Choose Buy Limit in the 4 order types of Pending Order.
Then enter price (Price), volume (Volume), stop loss (Stop Loss), take profit as calculated by your trading method, and then press “Place”, key order form.
If the price reaches the zone where you place the Buy Limit pending order, the order will be executed.
Example of a real-life Buy Limit use case
Consider the GBP/CHF forex pair in the example below. It is easy to see that the rate broke the Down Trendline in mid-January 2019.
After that, the exchange rate had a period of increasing but not strong that lasted until May 2019.
After that, the exchange rate dropped sharply throughout May.
However, when the rate approached the previously broken Down Trendline, the rate showed signs of slowing down, and this is also the Support Area of GBP/CHF, and also the Demand Zone, stimulating the exchange rate. Investors buy at this price range.
But the rate at the time of monitoring may not have reached the waiting area to buy, because the current price is higher than the waiting area to buy.
Then the Buy Limit order will come into play, investors can preset the trade according to the strategy of buying the GBP/CHF forex pair with the Buy Limit order.
When the price actually drops to this area and fills the order, then the order will run like a normal Buy order.
A good example of using the Buy Limit order.
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The above is an example of how to use the Buy Limit order in practice, and how you use it depends on your own trading method system, as long as the Risk:Reward ratio ( Risk:Return) is good enough and acceptable.