Price action vs Pending orders

Trading Discussion
1

So lately I’ve been thinking about this two totally different approaches to the market:

Approach 1 is price (re)action. This means that you react to some price action you see in your charts; no matter what. It can be a bulish/bearish formation at your favourite fibonacci level, a trendline breakout, a pullback at a resistance level, you name it.

Approach 2 is choosing beforehand at what price you expect to see some action, and placing pending orders, way before any price action happens.

There is risk in both approaches: in approach 1 you can be late for the party, and in aporoach 2 you easily get ran over if there is no supply/demand at the price you expected.

My feeling anyway is that most retail traders use approach 1 while pros use approach 2. Lately I’ve been thinking about approach 2 a lot as I’ve always been an approach 1 trader.

What you guys think? What approach is more similar to your style? Do we need to switch to approach 2 if we want to join the pro side?

Waiting for your comments guys! Have a nice trading.

2

I use both !

“Pending” for calculated gambles on Support and resistance, turning points etc and “Market orders” for shorter term stuff based on price action.

In fact whenever you place a “Stop loss” or a “Take Profit” on one of your punts - you are placing “pending orders” :wink:

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3

Sometimes I use pending order, but sometimes also will open trades based on price action, only look how to my analysis work, if likely support and resistance area still not yet confirmed, hence will open use pending order to these areas, but if likely on best momentum trades, hence will open instant execution

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4

I always trade long-term and always use pending orders to enter. I typically would set a buy order at a level where price action would confirm an upward move of which I want to be part, for example at the high of a down day - if price recovers and breaches that level it indicates buying strength, and I am happy to miss out on the move from the low or the close of the weak day in order to be in a trade which has this confirmation.

This allows me to be sure that each trade opened complies with my set-up and strategy rules and means I don’t have to be at the screen to catch a price move. It also virtually eliminates emotion from the trade process: I never open a trade “live”.

Of course, using pending entry orders also allows you to not have to choose which direction to take a trade in - you could have both a pending buy and a pending sell with a “one cancels the other” order set-up.

I always set a pending stop-loss attached to the entry order but often am able to exit manually of the TA deteriorates before my stop price is hit.

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