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Entry Limit Orders: Buy Entry Limit and Sell Entry Limit

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 pullback to before resuming the original Forex trend. Traders use them to buy or sell at better market price. These types of orders are available in most online trading platforms, for our example we will use the MetaTrader4 platform.

 

An entry of this type can be used to buy below the market level (up trend market retracement) or sell above the market level (downtrend Forex market retracement).

 

Buy limit - When buying, your entry buy limit is executed when the market falls to your set price. (retraces down)

 

Sell limit  - When selling, your entry sell limit is executed when the market rises to your set price. (retraces up)

 

Entry orders are placed by currency traders when they expect price to bounce back after reaching this level.

  • Entry Buy  Limit
    buy at a level below the current market level.
  • Entry Sell Limit
    sell 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 the point at which it was set.

Limit Buy Order Entry Placed to Buy Below the Current Market Price

Limit buy order entry placed to buy below the current market price

 

 

The currency then retraced and went down to hit the buy entry limit, and afterwards price continued to move upwards in the direction of the original Forex uptrend. When the limit buy order was hit it changed to a buy.

Price Hits Buy Limit, Order Now Changes to 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 the current market price

Entry limit sell order placed to sell above the current market price

 

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The currency then rallied, went up to hit the sell entry limit, and afterwards price continued to move downwards in the direction of the original Forex downward trend.

Price Hits Sell Limit, Order Now Changes to a Sell

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 Platform

To set up these Forex trading orders on the MetaTrader 4 platform, Right click on Forex chart>> Select "Trading">> Then Select "New">> Then on the pop up window that appears (shown below), under the label "Type" select the option of "pending" instead of "market execution">> Under the pending order options select 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 and Sell Limit Orders on MetaTrader 4 Platform

Setting Buy and Sell Limit Orders on MetaTrader 4 Platform

 

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 Fibonacci retracement indicator and use the 38.2 % retracement levels. This retracement level is watched by many currency 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% Fibonacci 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 Fibonacci Retracement and Fibonacci expansion use the right navigation menu section Technical Analysis.

 

Fibonacci Expansion Tool Tutorial - Fibonacci Expansion Tool Tutorial

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