What are Sell-Limit and Buy-Limit Orders in MetaTrader 4?
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How MetaTrader 4 Works
MetaTrader 4 (MT4) remains one of the most popular trading platforms globally, respected by Forex traders and investors. MT4 essentially serves the needs of market participants wishing to engage with Forex and CFD (Contract for Difference) markets, providing easy-to-use order types and analytical tools.
The trading platform is available on desktop and most mobile devices and can be downloaded and installed through a broker or the MetaTrader website. Through the MetaTrader trading platform, users can view currency prices in real-time (along with additional asset classes), open or modify orders, and employ technical and (on a basic level) fundamental analysis.
Additionally, a primary feature of MT4 is the ability to code algorithmic trading strategies. These are sometimes called ‘copy trading’, ‘automated trading’, ‘algorithmic trading’, or ‘algo trading’. They all involve computer-based software and are readily available in the MetaTrader library.
Types of Pending Orders in MT4
Four Pending Order types are available on MT4: buy limit, buy stop, sell limit, and sell stop.
To locate Pending Orders in MT4, traders and investors must search for the Order window. This can be found by pressing F9 on your keyboard and changing the Order ‘Type’ to Pending Order. From here, you can access the four Pending Orders in the tab below, also marked ‘Type’.
A buy-limit order allows one to limit the execution price for the security traded. These are generally used in dip-buying scenarios, as the orders are placed below current market price.
The limit price is the price level a trader is willing to purchase a security at or below the limit price. Therefore, the buy-limit order will execute at the limit price or better (so below the limit price).
Unlike a buy-limit order, a buy-stop order executes at the market price (the stop price) once triggered to buy into a rising market. Market participants employ buy stops to enter above the current market price: think breakout buyers looking to catch a move above resistance, for example.
A sell-limit order limits a specified price above the current market price to sell at or above the limit price.
By setting a sell-limit order at $1.2870, for example, if the price trades to $1.2870 from $1.2850, your trading platform automatically executes a sell order at the limit price or better. These types of pending orders are usually used in sell-on-rally scenarios.
A sell-stop order is used to enter the market below current market price. Similar to a buy-stop order, the sell-stop order is pending until triggered at the stop price, which then transitions to a sell order at the next available market price. These are commonly used for entering breakout trades below support.
As a note, buy and sell-stop orders are also usually used for setting protective stop-loss orders. A buy-stop is used to cover short (sell) positions, and a sell-stop covers long (buy) positions. They can also be used to trail profitable positions.
How to Use Sell Limit on MT4?
- Log into MT4 using your login credentials created in the sign-up process.
- Open the New Order window found on the upper tab of the MT4 trading platform, or alternatively press F9.
- Select ‘Pending’ from the ‘Type’ drop-down menu. You must then select the lower drop-down box also marked ‘Type’ to access the four Pending Orders. Choose Sell Limit.
Subsequent to point 3, the trader or investor can input the volume to trade (trading lots), the entry price (at price), the protective stop-loss price (Stop Loss) and the take-profit price (Take Profit). There is also an option to set an expiry date and time for the Pending Order to expire (Expiry).
How to Use Buy-Stop Limit on MT5?
Unlike MT4, which has four Pending Orders, the MetaTrader 5 (MT5) platform operates with six Pending Order types.
To open and employ Pending Orders on MT5, the process is similar to MT4: navigate to New Order on the top toolbar or press F9 on your keyboard. Within the Order Window, click ‘Type’ and select ‘Pending Order’. You must then select the lower drop-down box marked ‘Type’ to access the six Pending Orders available. In this example, we select the Buy-Stop Limit order which will highlight the relative fields needed to execute the aforementioned order. For example, options available are the entry price (Price), the protective stop-loss order value (Stop Loss), the take-profit order (Take Profit) and the Stop Limit price. An optional date and time expiration are also available in this window.
- What is a Buy-Stop Limit Order:
First and foremost, the buy-stop limit order is only available on MT5. What is interesting about this type of order is that it combines the buy-stop order and the buy-limit order. Ultimately, this allows a trader to place a buy-stop order above the current market price, which is inputted in the ‘Price’ field when creating the pending order. Following this, the trader inputs a buy-limit price order at the Stop Limit price (set below the buy-stop price level). When or indeed if the Ask price touches the buy-stop price, the buy-limit is then activated to be traded if the price corrects from the buy-stop price.