Today's topic will be, instead of hitting the market order, I can also do pending orders. I believe me and my fellow friends and family are very familiar with the phrase of buying stocks from movie and TV series. Refer picture below and I shall get the idea
Market order
Yeap. That's exactly what happened when people buying stocks at the trading floor. Now with CFD, since it's only an electronic contract, I can buy or sell or put on pending anyway I like to trade! Even if there is no physical stock available, nobody is selling 1? No problem, I can buy CFD. I know the price is going to take a dip, I don't have stock in hand, what can I do? No problem again, I can always sell a contract and buy back later! One can execute a position at market price anytime whether I have stock or no stock, I can always purchase a contract from the broker directly.
Pending order
Now this is hell lot of interesting. Naive people always call traders are gambler because they don't know what a trader know. A gambler put everything he can't afford to lose on the table for a game, a trader does studies and know the game, only risk affordable amount to lose in an INVESTMENT, be it long or short term. Hence, let me introduce the casino table in MT4 trading terminal. There are 4 types of gambling one can make here. Let's get on with it.
- Buy Limit. To put a buy position lower than current market price, to wait for market goes down, take my order, so I can take advantage when to buy financial instruments at lower price and profit when it rebounce.
- Buy Stop. To put a buy position above current market price. There are times that market price is very near to major resistance, I can choose to put a buy stop slightly above the resistance, in the hope when market make a breakthrough, it will take our position breakout together and make much more profit.
- Sell Limit. To put a sell position on top of current market price. The reason for this action is, where I think the resistance is going to hold, good chance is market will meet it's top there and turn back down. Hence I parked a sell limit at that price, in the hope that market will go up hit my entry price and bring it all the way down to my profit.
- Sell Stop. To put a sell order lower than current market price. This is when the price is very near to support, and there's a chance price will break further down(imagine had I order enough Sell Stops in BTC since last December).
Like it or not, this is very similar to gamble. Find the "pattern" that you like most, put down your stake and wait for "winning" your profit and continue the activity(more like continue gamble). Thanks for reading my story, to be continue. I will be talking about why do I seldom use these method and how I used to benefit from it previously.
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