Entry orders are a useful tool in forex trading. Traders can plan ahead and come up with a good trading strategy, but if they can’t carry out that strategy effectively, all their effort might go to waste. The forex market is open around the clock, so this means no trader can watch it all the time. So, traders need a way to carry out our trading strategy that suits their daily routine.
This is where setting up forex entry orders comes in handy. Entry orders allow traders to set the price that they want to buy or sell a currency in advance. This will only be executed if that specific price is reached. There are several advantages to trading forex using entry orders, which we explore below.
WHAT IS AN ENTRY ORDER IN FOREX TRADING?
A forex entry order is an order that is placed at a certain price level for a currency pair. Once this price is reached, the order is then executed/filled. If the price never reaches the desired price level, the order will not execute. The type of order can vary as well, which should be taken into account before placing the forex order.
TOP 5 BENEFITS OF USING FOREX ENTRY ORDERS
1. Price Control
The first benefit of entry orders is the control they give over price level. Traders can specify their preferred price level entry point at which the trade will execute. Having this ability to designate a level allows for convenience of trading without having to constantly monitor the market.
The image below shows an example of a deal ticket outlining the price field whereby a trader can set his/her price execution level. The process and layout should be similar across most platforms.
2. Entry Orders Are Time-Efficient
Forex entry orders are a great way to save time. They allow traders to enter a trade automatically when the price reaches a certain level or breaks out of a range. Traders can easily set an entry order based on their analysis and expectations of the price movement. The order will wait for the right moment and free up the traders' time for other tasks.
Stop and limit orders
Traders can also enhance their strategy by setting conditional stop and limit orders to manage a trade once the entry order is executed and they are not online. This gives them confidence that they have not left their trades unprotected without any exit orders.
To set this type of order, fill in the “Stop” and “Limit” fields on the deal ticket when placing a forex entry order (see image below).
These orders will only become active after the entry order is triggered and opens a trade on our account. That means, a trader does not have to worry about a stop or limit being hit before an entry order is reached.
3. Improved Financial Management
Forex entry orders help traders save money by considering the limited time they can dedicate to trading each day. Most traders have other commitments, such as jobs or family responsibilities, which restrict the amount of time they can actively monitor the market. When comparing this limited trading time to the 24-hour forex market, the odds of being present for an optimal trading opportunity are low. By using entry orders, traders can set specific parameters for their trades and take advantage of the remaining 96% of the time when they are away from the computer. This increases the chances of getting optimal trade entries and maximizing profits.
4. Enhanced Accountability
Forex entry orders, combined with stop-loss and take-profit levels, promote accountability among traders. These orders eliminate the influence of emotions, such as greed or fear, that can derail a trader from their predetermined trading plan. Before starting trading, traders should establish a strategy with predefined rules for various situations. However, emotions can sometimes lead them astray, causing impulsive or irrational trades. Entry orders help mitigate this risk by automating the trade execution process based on predetermined criteria, ensuring traders stick to their strategy and make reliable, profitable trades.
5. Time Frame Support
Trading on custom time frames allows for more precise trades aligned with specific market events, news, or corporate results. Traders can set the expiry period for entry orders, which provides flexibility in executing trades. Orders can be set to remain active until manually canceled by the trader ("Good till cancelled") or until a specific date ("Good till date"). This feature enables traders to tailor their trades to align with their expectations regarding market movements triggered by upcoming events, thus increasing the potential for successful trades.
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