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 certain price that is a retracement level where price is predicted to pullback to before resuming original XAUUSD trend. XAUUSD traders use them to buy or sell at a better market price. These types of orders are available in most online trading softwares, for our example we shall use the MT4 platform.
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 when the market falls to your set price. ( price retraces down )
Sell limit - When selling, your entry sell limit pending order is executed 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 level below ruling market price.
- Entry Sell Limit sell at a level above ruling price.
Buy Entry Limit Example
In the example shown below, the buy limitpending order was placed 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 up-wards in the direction of the original 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 example shown 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 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 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 Software
To setup these orders on the MT4 platform, RightClick on chart>>> Choose 'Trading'>>> Then Select 'New'>>> Then on the popup window that appears (illustrated & displayed below), under the label 'Type' select option of 'pending' instead of '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 MT4 Software
Sometimes, setting the point value to place your trade can be tricky, setting to far may mean your entry market 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 trade position would be presented by using the 38.2% Fibonacci retracement level.
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 trade transactions you can use the Fibonacci 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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