Pending Vs Market - advice from experienced ones please !!

Sat
57
Sat  

Hi,

I am a newbie and am trying to work out some strategies. However, I am not sure if I need to be working with Pending Orders or market Orders ? The program logic will need to be substantially diff I understand depending on this.

Is there an advantage to having the EA issue Market Orders rather than placing Pending Orders ?

Also, similarly with StopLoss, Is there an advantage to having the EA close the order when trrade goes unfavorable or it is best to have a StopLoss prespecified ?

thanks & regards

Sat

charly king her
1074
charly king her  

Hey, I best advice you stick with market orders.

Here are the good reasons:

1) With a pending order, you have basically revealed your game plan to the broker and the sharks. This is bad.

2) With a pending order, your orders may never get executed. If they do get executed, then its probably not advantegeous to you anymore.

3) With a pending order, your order may get executed accidentally and reverse completely to hit your stoploss.

4) Market orders are more instantaneous and more accurate of current situation.

5) Market orders give you the best price because you planned it and you got instantaneous market price.

6) Pending order does not represent true situation or current situation. Even if your pending is executed, it may no longer be advantageous.

7) Regardless of market order or pending order, there will always be spreads. So pending order does not really give you any price or spread advantage.

Definitely market orders. However, if you like pending orders (the choice is yours for the making.)

Reread the reasons and especially reason #6 and #7.

proscalping
28
proscalping  

Pending orders are a great way to trade the market.

You dont need to sit and wait for the price to reach the level as if you are trading manually.

Pending orders are a great way to trade certain strategies. Hence, the different opinions regarding pending orders. It comes down to how you are implementing your pending orders and your overall strategy.

If you have a great strategy that uses price action, then pending order are a must. Once you understand the behavior of the swings in the forex market, you can automate your strategy by using pending orders.


Everyone trades differently, so asking for someones opinion may not be the best way of achieving the knowledge that you are looking for.


The best way to improve your game plan, is try it out on your own.


Even if you give the best strategy to two different traders, that strategy will result in 2 completely different outcomes because or the personality of that trader.


If you can come up with a system using pending orders, do not think that you have a disadvantage.


However, if you do not have much experience trading, pending orders may not work for you because of What the Last Comment said- Stops, Spread, Reversals, etc_

Do not think that the broker is pushing price down to Fill your pending orders and then reverse the market direction just to hit your Stoploss. That is silly,

In most cases, if this does happen to you, THEN obviously, you placed a pending order at Support/resistance, and the price Bounced and did not Break in your favor. (understanding this concept, will give you an advantage of using pending orders, Just think about it.

Taskin Osman
772
Taskin Osman  
There is no global recipt whats better it really depends on strategy. you should try many possibilities while development.There are situations you must use limit/stop orders and other there you have to take market
Tony
262
Tony  

Hi Sat

I assume you are talking about orders placed by an EA. If this is the case:


One difference between pending and market orders comes down to how quickly your EA can get a market order executed. Pending orders (limit or stop) are executed entirely by the trade server and will trade as soon as the limit or stop is reached - it's almost instant. Market orders initiated by your EA must be sent to the server, accepted and then traded, which can take anything from a few seconds to many seconds. This is probably only an issue if you are trading short timeframes on volatile markets, but it can mean you get more slippage or the price exceeding the slippage.


Another factor is whether your EA is active or not. If your computer stops or your internet connection fails or slows, then your EA is unable to execute a market order and you risk missing an entry or exit.


I can't believe there is any issue to do with giving your game away - unless you are trading very large volumes looking for very small moves.


Prices tend to bounce around a bit so limit orders give different results than stop orders. Limit orders will trade on the favourable side of the 'bounce' whereas stop orders trade on the unfavourable side of the 'bounce.' Whichever is suitable depends on your strategy.


As trendme implied above, you should use whatever you are comfortable with. Everyone has different styles and comfort levels, even in automated trading.


Finally, never, ever have an order without a protective stop-loss. Consider what would happen if you have an open order and your computer or internet connection stopped when the market moves against you. If you really don't want to expose your exit plan, then make your protective stop-loss further away than your planned exit.


Hope this helps.

Jellybean