Entry Limit Orders: Buy Entry Limit and Sell Entry Limit - Limit Order in Forex

Limit order definition - An Entry limit is an order to buy/sell a Forex currency at a certain price which is a pull back area where price is predicted to pull-back to before it resumes the original trend. Traders use them to buy/sell at a better market price. These types of orders are available in most online platforms, for our example we shall be using the MT4 platform.

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

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

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

Entry orders are set by online traders when they expect price to bounce back after reaching this point.

• Entry Buy Limitbuy at a level below the current market level.

• Entry Sell Limitsell at a level above the current market level.

Buy Entry Limit Example

In the example below, the buy limit pending order was set to open buy at a price below the ruling market price. Point B is point at which it was set.

Limit buy order entry placed to buy below current market price

The currency then retraced and went down to hit the buy entry limit, and afterwards the price continued to move upward in direction of the original uptrend. When limit buy order was hit it changed into 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 ruling market price. This is the level for the price pull back.

Entry limit sell order placed to sell above current market price

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

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 pull back.

Setting Buy & Sell Limit Orders on MT4

To set up these orders in MetaTrader 4 software, Right-Click on chart>>> Choose "Trading">>> Then Select "New">>> Then on the popup panel that pops up (illustrated below), under label "Type" select the option of "pending" instead of "market execution">>> Under 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 in MT4

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 Fibo retracement indicator and use the 38.20% retracement levels. This retracement level is watched by many 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% Fibo retracement level.

Fibonacci Retracement Tutorial - Fib Retracement Tutorial

Tip: In 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 FX Fibo Retracement and Fibo expansion use the right navigation menu section Technical Analysis.

Fib Expansion Tool Tutorial - Fib Expansion Tool Tutorial