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Pending Order Strategy – Recommendations

Friday, 12 January 2018 12:45
Pending Order Strategy – Recommendations

Pending Order Strategy is a simple trading system, which works using pending orders in the Forex market. It involves trading with high volatile currency pairs.

Fundamentals of Strategy

Using a four-hourly timeframe (H4) is necessary. The best-traded currency pair is EUR/USD. For working with this strategy, it is better to choose high volatile assets. In this case, pending orders would be appropriate. 

To implement Pending Order Strategy, set the following indicators:

  1. Exponential moving average with a period of 300. It is a standard indicator in the MetaTrader4 and MetaTrader5 platforms. It visually identifies the availability of the trend. You should open transactions exactly in the direction of the trend. Therefore, ignore the opposite signals. 
  2. Nonlagdot is a trend indicator, which resembles Parabolic in appearance. The distinctive feature of this robot is a color change when the trend reverses. The trader receives the signal when the color changes. To be sure that the signals are accurate, you can also add a moving average. A powerful prerequisite for opening a deal will be simultaneous indicators on the reversal of the trend from both tools.
  3. SuperTrend is another signal indicator, which must be considered in tandem with the previous one. Also, it changes color when the direction of the price changes. 

Trade rules by Pending Order Strategy

First, open the chart of the required pair, set the H4 timeframe and apply all the tools. We recommend creating a template with all necessary technical tools for this strategy. In this case, you do not need to add them on the chart manually every time. 

  • A Buy Stop order is placed in the following situation: the price chart is higher than EMA; the Nonlagdot and SuperTrend indicators become blue and green, respectively (it signals about the beginning upward trend). At this moment, you should “catch” a rollback of the price from the current trend and place a pending order at the top of the rollback, adjusted for 5-10 points. It is the main goal of Pending Order Strategy.  

It is important to understand that you should open an order if the candlestick was bearish at that moment and it was closed below the minimum of the previous candlestick. At that point, the indicators should not change the color. Also, the rollback can be predicted, if the series of several closed bearish candlesticks has been formed in a row.  

A Stop Loss order should be placed close to the local minimum, which is nearby. According to this strategy, you don’t need to place a Take Profit order.

  • Place the Sell Stop, if you see the situation, which reflects the previous one. That is, the price chart should be higher than EMA 300; the indicators should identify a downward trend. At the top of the price rollback, place a pending order. At the same time, a candlestick should be bullish. 

Set a Stop Loss along with the closest local minimums, above the SuperTrend line. 

The Rules of Exiting the Position

When the price chart crosses the SuperTrend line, it is time to close the transaction; the order should be closed if at least one indicator changed its color. 

To save the position, apply a manual Trailing Stop. Move it as far as the price is moving, focusing on local maximums/minimums of the price, or the curve of the indicator, mentioned above.  

Testing the Strategy

The author of Pending Order Strategy tested its brainchild on the EUR/USD pair for two years. All this time, he was strictly following the described rules and got a profit of 56,55 %.

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Pay attention that in this case, Pending Order Strategy was tested without using a Trailing Stop. Thus, your results can be much more impressive. To make your trading profitable, refrain from making deals during 30 minutes before and after the release of the important economic news. Such announcements affect the quotations a lot and, as a result, a gap may occur. 

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David Melton
David Melton

Financial expert. I work with investors and different companies. I write analytical reviews for newspapers and TV channels and I also manage researching projects