Entry Limit Orders: Buy Entry Limit & Sell Entry Limit
Limit order definition - Entry limit is an order to buy or sell a XAUUSD at a particular price that is a retracement level where price is predicted to pull-back to before resuming original XAUUSD trend. XAUUSD traders use them to buy or sell at a better market price. These types of trading orders are available in most softwares, for our example we shall use the MetaTrader 4 platform software.
An entry of this type can be used to buy below the market level (up trend market retracement) or sell above market level (down trend market retracement).
Buy limit - When buying, your entry buy limitpending order is executed/opened when the market price falls and drops to your set price. ( price retraces downward )
Sell limit - When selling, your entry sell limit pending order is executed/opened when the market rises to your set trading price. ( price retraces up )
Entry orders are placed by traders when they expect price to bounce-back after reaching this level.
- Entry Buy Limit buy at a price below ruling market price.
- Entry Sell Limit sell at a price level above ruling price.
Buy Entry Limit Example
In the exemplification shown below, the buy limitpending order was set to buy at a price below ruling market price. Point B is point at which it was set.
Limit buy order entry placed to buy below ruling market price
The trading price then retraced & went down to hit buy entry limit, & afterwards gold trading price continued to move upwards in the direction of the original and initial XAUUSD upward trend. When limit buy order was hit it changed into a buy.
XAUUSD Price hits buy limit, order now changes to a buy
Sell Entry Limit Order
In the exemplification shown below a the sell entry limit was set 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 ruling market price
The market price then rallied, went upto hit sell entry limit, and afterwards gold trading price continued to move downwards in the direction of the original and initial XAUUSD downward trend.
XAUUSD Price hits sell limit, order now changes to a sell
When gold quote hit the set level & the trade order changed in to a sell, this is therefore a nice strategy to buy or sell at a better price after a price retracement.
Setting Buy & Sell Limit Orders in MetaTrader 4 Platform
To setup these orders on the MetaTrader 4 software, RightClick on chart>>> Choose 'Trading'>>> Then Select 'New'>>> Then on the popup window panel which appears (illustrated & displayed below), under the label 'Type' select option of 'pending' instead of the 'market execution'>>> Under the pending order options choose the pending order type: for This trade select either "Buy Limit " or "Sell Limit " depending on whether you as a trader want to place a pending buy or sell.
Placing Buy & Sell Limit Orders on MetaTrader 4 Software Platform
Sometimes, setting the point value to place your trade can be tricky, setting to far may mean your entry limit not getting executed, the best tool to use is Fibo retracement indicator and use the 38.2% retracement levels. This retracement level is watched by many traders & entry orders tend to crowd at this level, therefore the best odds to catch a position would be presented by using the 38.2% Fib retracement.
Fibo Retracement Tutorial - Fib Retracement Guide
Tip: in XAUUSD online trading, If you as a trader want to set a good take profit order level (not retracement level, takeprofit level) for your trades you as a gold trader can use the Fib expansion 100% level for the best take profit area. To Read more on Gold Trading Fibo Retracement and Fibo expansion use the right navigating menu section Technical Analysis.
Fibo Expansion Tool Tutorial - Fibo Expansion Tool Tutorial
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