I’m going to show you a very simple technique I use to place pending pending orders forex trading on diagonal trendlines. Now, this process can be simplified using an expert advisor which you can research to see if there are any free ones out there of if not then hire a MT4 coder to create one for you.
But before I get into the details of that, for those you who are regular readers and visitors to swing-trading-strategies. You’ve got to have a laugh once in a while. A buy limit pending order is placed below the current market price so if price heads back down and hits the pending order, it will activate a buy order. A buy stop pending order is placed above the currency market price so if price goes up and hits it, a buy order is activated. It you want to trade the breakout to the upside of resistance levels, or highs of candlesticks a buy stop pending order is what you use. A sell limit pending order is placed above the current market price. If you place a sell limit pending order, then you are waiting for price to head back up to hit that order and activate a sell order.
A sell stop pending order is placed below the current market price. So a sell stop pending order is essentially a breakout sell pending order to capture further downward move of price. If you want to trade the breakout of support levels, or breakouts of the lows of candlesticks, then sell stop pending order is what you use. There are the only 4 pending orders available in MT4 trading platform. I’m not familiar with other trading platfroms so really can’t make any comments on those. Advantages of Pending Orders If you have a day job or you don’t have time to sit and watch your trading sceen, then using pending orders in forex should form your set-and-forget type of trading strategy which you can use. All you do, is set your open pending orders at the price level you want to get into a trade, set your stop loss and take profit targets and you can walk away.
THE PROBLEM: DIAGONAL TRENDLINE ANGLES Can you pick the exact spot where price is going to hit a diagonal trendline and bounce up or down from? You really have to be sitting there and monitoring the price movement to actually see it touch the diagonal trendline to take a trade. This is the problem: price moves up and down VERTICALLY and forms simple horizontal levels of support and resistance, pivots, fibs etc. Now, what I’f you are not there watching that diagonal trendline?
That’s the challenge I’ve faced with trying to place pending orders based on diagonal trendlines, especially when trying to use sell limit and buy limit orders on diagonal trendlines. I had to pick up my daughter from school just when I see that a forex trading setup I have been watching closely for over a month is now about to come to fruition and that trading setup is based on a diagonal trendline! Should I let my child wait for me alone at school while it may take me heaven-knows-how-many-minutes before I go pick up my child after I place my trade? George Bush’s Iraqi War when my missus finds out and there won’t be any more strange movements under the bed sheets at night for a very very long time! Heck, I’d be forced to sleep in the couch for sure!
You see, I don’t have any expert advisors to set to take the trade on my behalf while I’m gone. Placing pending orders on diagonal trendlines is really a wild guess at best because its at an angle and you really don’t know at what level, price is going to go to ensure your pending order gets filled. Now, that’s not the case with placing pending orders on horizontal price levels. THE SOLUTION Now, this is not the perfect solution, but it has worked fairly well for me. There’s a little bit of guessing involved. I think price is going to hit or touch this trendline?
Is it 2 or 3 or 4 candles later? Step 3: Based on your answer, drag the vertical line you drew in step 2 to the the place where you think the future candlestick will hit the trendline. This vertical line will intersect with the diagonal trendline. Remember, this future candlestick has not formed yet. You are doing a future price projection. Step 4: If price does not hit the trendline, keep repeating the process and adjusting your intersection price until your pending order is activated. If price its too far away, you’d be wasting your time.
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After starting the test, you can place orders in the program. Open Positions or Pending Orders tabs. This feature allows you to change stop loss and take profit parameters for already opened market orders. Also, you can use this window to close the trade. You need to select an order first in the Open Positions list.