In forex trading, entry orders are an invaluable instrument. Trading plans may be developed by careful planning, but if a trader can’t carry it out successfully, all of their hard work is for nothing. Since the forex market is open around-the-clock, no trader can continuously monitor it. Therefore, traders require a method of carrying out our trading strategy that works with their daily routine.
Setting up forex entry orders becomes essential in this situation. Entry orders let traders predetermine the price at which they want to purchase or sell a currency. This will only be carried out if the predetermined price is reached. We examine some advantages of utilizing entry orders while trading forex below.
WHAT IS A FOREX ENTRY ORDER?
An order for a currency pair placed at a certain price level is known as a forex entry order. The order is then executed or filled when this price is attained. The order won’t be carried out if the price never reaches the targeted price level. Before making a forex order, it is essential to evaluate the many order types that may be available.
THE TOP 5 BENEFITS OF USING FOREX ENTRY ORDERS
1) Price management
Entry orders’ first advantage is the control they provide over price level. Traders may specify the price level they want the transaction to open at for it to be executed. The option to specify a level makes trading easier since it eliminates the need for regular market monitoring.
An example of a deal ticket with the price field highlighted, where a trader may select the amount of price execution, is shown below. Most platforms should use a similar procedure and layout.
2) Entry Orders Help You Save Time
Forex entry orders are excellent for reducing wait times. By establishing one, traders may be elsewhere when a trend line is crossed or when a price channel is broken. If the price acts as the trader expects, they may quickly add an entry order to enter the trade. Trading may concentrate on other activities since the order handles the waiting.
Limit and stop orders
Furthermore, traders may manage a trade if the entry order is activated while not logged in to the platform by putting conditional stop and limit orders. This gives comfort in knowing that no deals were executed without management orders attached.
Fill out the “Stop” and “Limit” columns on the deal ticket when making an FX entry order to establish this kind of transaction (see image below).
The entry order must be activated before it initiates a transaction on our account for stops and limits to become active. A trader should not be concerned about a stop or limit being struck before an entry order is filled.
3) Improved Financial Management
Forex entry orders can contribute to cost savings. Think about how much time traders spend trading each day to understand this better. 12 hours? 6 hours? 1 hour? 10 seconds? Most likely fall in the bottom half of the range between 10 and 1 hour (if we look at the average amount of time per day). This is because most have day jobs, families, or other commitments.
Now we have to compare that period to the 24-hour trading day on the currency market. The market is viewed for 0.7% of the day if a trader spends 10 minutes daily making transactions. A trader only observes the market for around 4% of the day if they spend an hour making transaction. Given this information, what are the chances that a trader will be watching the market at the ideal moment actually to execute a transaction?
The chances are probably not favorable. The 96% of the time a trader spends away from the computer is significantly more likely to be the best time to initiate a trade. Traders will likely get a less-than-ideal entry if they push themselves to trade within this brief window. Trades with sub-optimal entry result in traders losing money.
Even if the optimum price may not be accessible when a trader is physically seated at their computer, they should still attempt to get it. Therefore, entry orders might provide the trader with the most incredible opportunity to execute at the best price.
Additionally, Forex entry orders with connected stops and limits support the accountability of traders. This is because they guarantee traders abide by the rules to the letter and remove the potential of emotions coming in the way of dependable, lucrative deals.
To put this into perspective, each trader should have a strategy and a set of rules before they start trading to be prepared for any event and know precisely what to do before it occurs. But occasionally, emotions (such as greed, fear, or overconfidence) can cause traders to deviate from their predetermined trading strategy, leading them to make unplanned changes in the market in the hopes of “getting lucky” rather than taking a calculated risk where they believe they have an advantage. Entry orders may reduce this risk and ensure traders stick to their plans.
5) Encourage Time-Frame Trading
Depending on the market being traded, trading on a unique time frame might enable more precise transactions that may align with impending market news, political events, or corporate outcomes. The following illustration shows how traders may specify the entry order’s expiration period:
- “Good till cancelled” means the entry order will not be canceled until the trader manually deletes it.
- “Good until date” indicates that the entry order will be valid until a particular day.