A little survey on setting orders

This is a little survey or test or opinion poll on how traders set their entry and exit orders. Its a simple subject but is confusing to new traders.

Let’s suppose you wish to set a buy order if price goes higher than the current candlestick on your chart. The high is 1.1200. The chart is based on bid prices. The spread is 1 pip.

Q1 - At what price do you set the buy order?

I use buffer; means above & low price according to the support/resistant levels.

That make sense. But what would be the closest price to this bar’s range you would use to enter long?

It depends, mate (on trading pair as well as the time frame), there is no fixed answer.

There is one correct answer to this problem as I have drafted it. I appreciate what you say about support and resistance but you are looking at other problems, not mine.

Anyone else care to share an opinion?

Two days since I set this first problem. Only LauChoKun has made an effort, but he couldn’t make his mind up.

This is very simple stuff. Anyone else care to respond?

Still no prices offered by members of the forum.

Is this problem so easy its not worth anyone’s time, or is it so hard that nobody can answer it?

Or is my original theory correct, that this basic task in trading is very confusing for many traders?

Different brokers accept different types of forex orders.

Yes they do. You can select the order type as you wish, but at what price would you set your buy order as in my first post?

Five days gone now and no definitive answer suggested for this most basic trading task -

Q1 - If you wish to set a buy order if price goes higher than the current candlestick on your chart and the high is 1.1200, at what price do you set the buy order?

(The chart is based on bid prices. The spread is 1 pip.)

Pressing on, setting an entry order is obviously only a part of any trade, risk also has to be managed. So -

Q2 - you wish to set a stop-loss order to close your long at the earliest available price if price on the chart falls below the low of the “entry” candlestick. We know its high was 1.1200, let’s suppose its low was 1.1192. The chart is the same, base don bid prices. The spread is the same, 1 pip.
What is the price you set for your stop-loss?

Your question seems to imply that the platform in question does not display tenths of pips, or accept orders stated in tenths of pips. If this is the intent of your question, then –

High was 1.1200 bid x 1.1201 ask
Low was 1.1192 bid x 1.1193 ask

  • To enter LONG as soon as price breaks above previous high,
    place a BUY STOP at 1.1202

  • To exit that LONG position as soon as price breaks below the previous low,
    place a SELL STOP at 1.1191 (stop loss)

On the other hand, if fractional pips are part of the deal, then –

High was 1.12000 bid x 1.12010 ask
Low was 1.11920 bid x 1.11930 ask

and the orders to place are

  • BUY STOP at 1.12011 to enter, and

  • SELL STOP at 1.11919 to exit (stop loss)

Yes, I was just keeping to full pips to keep things simple.

Anyway Clint, you’ve got it, thank you. Buy order at 1.1202, stop-loss at 1.1191.

This is a simple problem but confuses many traders. The answers to the two Q also illustrate several things which new traders will be often blind to.

Firstly, the range between entry and stop is much much wider than the range between the signal bar’s high and low. The bar as seen on the chart is only 8 pips in range (1.1200 minus 1.1992). However, the range between entry and stop is 11 pips. So what might have looked at first sight like an easy opportunity to make a quick win is reduced. In order to break even on such a tight trade set-up, price now has to travel over one third further, nearly 50% further, 11 pips instead of only 8. This makes the win less likely. It also means the position size needs to be reduced accordingly.

Secondly, the adjustments to the entry buy order and to the stop-loss order are not symmetrical. The buy order needs to be 2 pips higher than the signal bar, whereas the stop-loss needs to be just 1 pip lower.

What might seem like small miscalculations in areas like these have a habit of compounding the impact on the account as you increase buy-stop range, position size and number of trades.

if we have a pending order, how long can we keep it pending?

Usually there’s an option to set the order to expire at a time and date of your selection. The default setting is usually GTC, Good Till Cancelled, which means the order remains “Pending” until you manually cancel it or it is executed.

(On the platform I use there seems to be no limit on how far off is the future date that an order can be set to expire. I got to 5 years ahead and then stopped checking…)