Limit Orders - It's a mystery to me... | Forex Factory

Options

Permalinks
Print Thread

Similar Threads

Buy Stop Limit and Sell Stop Limit Orders on MT4 6 replies

Difference between stop-orders and limit-orders 9 replies

Should I use bid/offer orders (spread free) over limit orders? 4 replies

Stop orders instead of limit orders 0 replies

Market Orders or Limit Orders? 6 replies

Attachments: Limit Orders - It's a mystery to me...
Exit Attachments

Limit Orders - It's a mystery to me...

  • #1
  • First Post: Edited 10:47am Nov 27, 2012 10:24am | Edited 10:47am
For the life of me I can't figure out why someone would ever enter the market via a limit order.

Seriously. Think of a car that drives up and down the same road all day. Why would you think that at a certain point in time the thing is going to screech to a halt and turn around to go the other way? Wouldn't you think it's going to pass through that point and keep going since it's already headed in a certain direction?

Same thing with price. Pending stop orders make sense. Price is going up, as it crosses the buy stop line the order is entered and you're in headed in the current direction of the price. Why would someone think that price is headed in a particular direction enough that it's going to pass through a particular point but as soon as it kisses that price it's going to instantly double back and go the other way?

Isn't someone who uses limit orders trying to "pick tops and bottoms" when nobody can really do that?

I'm sure people run systems with these things that generate them a lot of money....but I can't imagine how such a system would work.
  • #2
  • Nov 27, 2012 10:37am Nov 27, 2012 10:37am
Because PA will change direction (or it's gonna be just correction wave) after it reaches resistance or support. Especially when PA touches S/R for the first time, second touch can be also good for rejection, every other time is much less reliable.
  • #3
  • Nov 27, 2012 10:49am Nov 27, 2012 10:49am
I use plenty doing fine with them
  • #4
  • Nov 27, 2012 10:53am Nov 27, 2012 10:53am
Quoting fx111
Because PA will change direction (or it's gonna be just correction wave) after it reaches resistance or support. Especially when PA touches S/R for the first time, second touch can be also good for rejection, every other time is much less reliable.
Could you tell me what does PA mean? I'm quite new here
  • #5
  • Nov 27, 2012 11:17am Nov 27, 2012 11:17am
PA stands for Price Action


Also...thanks for helping me on this guys. It makes more sense now.
  • #6
  • Nov 27, 2012 11:40am Nov 27, 2012 11:40am
Quoting FXRenegade
For the life of me I can't figure out why someone would ever enter the market via a limit order.

Seriously. Think of a car that drives up and down the same road all day. Why would you think that at a certain point in time the thing is going to screech to a halt and turn around to go the other way? Wouldn't you think it's going to pass through that point and keep going since it's already headed in a certain direction?

Same thing with price. Pending stop orders make sense. Price is going up, as it crosses the buy stop line the order is...
I use limit orders. And look at my stats using them http://www.forexfactory.com/showthre...04#post6237104

The thing about limit orders is it isn't exposed to requotes. You fill at an exact price. So say, your like me. IN which I trade only 1m chart. I basically use the pending orders to setup the reversal which can come at any given time. A reversal candle looks like this.
(example 1) Do you see the last green candle to the far right? That is how your chart will look at a 1m close. So with the last 10 seconds you can place a pending BUY at the highest high of the top band, and pending sell at the lowest LOW of the bottom band *EXPECTING* a big breakout.

(example2) This is the candle which no one expects, and causes a breakout south. Only 2 mins later, breaking the LOWEST LOW which was the candle of 5 mins before that long red candle south. Now if you trade using high leverage, that candle alone would of earned you 10 points profit from the time your pending sell is activated to the time it closed. Thats 100% profit of your investment.

Should you have tried to short once that low was broken, you would of never filled. You would of been hit with requotes. Hope that answers your question.
Attached Images
  • #7
  • Nov 27, 2012 12:05pm Nov 27, 2012 12:05pm
Quoting AmberLynn
...So say, your like me. IN which I trade only 1m chart. I basically use the pending orders to setup the reversal which can come at any given time. A reversal candle looks like this.
(example 1) Do you see the last green candle to the far right? That is how your chart will look at a 1m close. So with the last 10 seconds you can place a pending BUY at the highest high of the top band, and pending sell at the lowest LOW of the bottom band *EXPECTING* a big breakout.

(example2) This is the candle which no one...
A little confused...based on your example 1
what price is the highest high of the top band?
what price is the lowest low of the bottom band?
Thanks!
  • #8
  • Nov 27, 2012 12:20pm Nov 27, 2012 12:20pm
Quoting kokopelli
A little confused...based on your example 1
what price is the highest high of the top band?
what price is the lowest low of the bottom band?
Thanks!
Highest high at that time would of been 1.2993
Lowest low at that time would of been 1.29865
The lowest low is the lowest point of the last RED candle which you see reading it from RIGHT TO LEFT. The highest high is a candle which you can't see in that picture.

Playing the lowest low is you "FOLLOWING THE TREND" while the pending buy is you playing "START OF A REVERSAL"
  • #9
  • Nov 27, 2012 12:39pm Nov 27, 2012 12:39pm
Quoting FXRenegade
For the life of me I can't figure out why someone would ever enter the market via a limit order...
Limit orders work well when one can't or doesn't want to actually watch price action turn around.
Quoting FXRenegade
Pending stop orders make sense. Price is going up, as it crosses the buy stop line the order is entered and you're in headed in the current direction of the price. Why would someone think that price is headed in a particular direction enough that it's going to pass through a particular point but as soon as it kisses that price it's going to instantly double back and go the other way?
Because some traders watch and evaluate more things in the market than just price action...for example, option barriers, commitment of traders, order books. As well certain price patterns "telegraph" sometimes weeks in advance of a certain level that where sellers and buyers will change control.

Further, some traders prefer NOT to buy the high or sell the low...some traders actually SELL the high and BUY the low. Limit orders help do this with a great deal of precision without the indecision that usually occurs at tops and bottoms.

Quoting FXRenegade
Isn't someone who uses limit orders trying to "pick tops and bottoms" when nobody can really do that?
That is exactly what "someone" is doing. I'd like to think I count myself among them. My last limit order on GBP/USD was at 1.60495. I "missed" the top by 4.8 pips. Considering my spread is usually 3.8 pips I'd say I did pretty good. Limit orders serve well when I just can't be in front of the computer, or am too tired to be in front of the computer.

Quoting FXRenegade
I'm sure people run systems with these things that generate them a lot of money....but I can't imagine how such a system would work.
One's imagination is the only thing limiting one's view of the markets. Just be cause YOU can't pick tops and/or bottoms doesn't mean it can't be done, and done well.

Limit orders, as with any order, must have predefined risks and stop loss orders for protection. Some of
  • #10
  • Last Post: Edited 1:04pm Nov 27, 2012 12:53pm | Edited 1:04pm
Quoting AmberLynn
Highest high at that time would of been 1.2993
Lowest low at that time would of been 1.29865
The lowest low is the lowest point of the last RED candle which you see reading it from RIGHT TO LEFT. The highest high is a candle which you can't see in that picture.

Playing the lowest low is you "FOLLOWING THE TREND" while the pending buy is you playing "START OF A REVERSAL"
11/27/12 3:12 Oanda

Thanks for the reply!

You wrote: The lowest low is the lowest point of the last RED candle which you see reading it from RIGHT TO LEFT
Wouldn't that be 1.2982??? NOT 1.29865???

When you wrote "band" in your first post - I assumed you meant the Bollinger Bands (example 1). And in that case, the "highest high of the top band" would have been 1.2991, and the "lowest low of the bottom band" would have been 1.2982.

Very interesting...will be following your posts.

Good job on your scalping!!!
0 traders viewing now