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A SELL LIMIT order is a powerful tool in the trading toolkit, allowing traders to sell an asset higher than the current market price. This type of pending order is beneficial for traders who believe the price of an asset will rise to a certain level and then reverse, providing an ideal short-selling opportunity. This article places a SELL LIMIT order on the MT4 and MT5 platforms, using a practical example with GBP/USD at 1.3200.
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What is a SELL LIMIT Order?
A SELL LIMIT order is a pending order used when a trader wants to sell an asset above the current market price. The order is only triggered if the price rises to the level specified in the SELL LIMIT order, at which point the platform will automatically execute a sell order at that price or higher. This type of order is ideal when a trader expects the market to reverse and decline after reaching a higher price.
For example, if GBP/USD is currently trading at 1.3100, but you expect the price to rise to 1.3200 and then reverse downward, you would place a SELL LIMIT order at 1.3200. Your order will be triggered once the price reaches 1.3200, and you’ll be placed in a short position.
Steps to Place a SELL LIMIT Order on MT4 or MT5
Placing a SELL LIMIT order on MT4 and MT5 is simple and involves similar steps for both platforms. Here’s how you can do it:
Step 1: Open the MT4 or MT5 Trading Platform
Log in to your MT4 or MT5 platform. Ensure your account is adequately funded for live trading, or switch to a demo account if you are practicing.
Step 2: Open the New Order Window
- On MT4, you can open a new order window by pressing F9 or clicking the ‘New ‘OrdeOrder’tton on the toolbar.
- On MT5, click the ‘New ‘OrdeOrder’ button or right-click on the chart of the desired asset (GBP/USD in this case) and select ‘Trading’ followed by ‘New ‘Order.
This will open the order entry window where you can input the trade details.
Step 3: Select GBP/USD as the Trading Symbol
In the ‘Symb’ol’ drop-down menu, select GBP/USD. This ensures your SELL LIMIT order will apply to the GBP/USD currency pair.
Step 4: Set the Order Type to Pending Order
In the ‘Type” section of the order window, change the default setting from Market Execution to ‘Pen’ing Order.’
Step 5: Select SELL LIMIT as the Pending Order Type
From the pending order type options, select SELL LIMIT. This indicates that you want to sell at a price higher than the current market price.
Step 6: Enter the Price (1.3200)
In the ‘Price’ field, specify the price you want your SELL LIMIT order to be triggered. For this example, let’s use 1.3200 as the price level. Your order will only be executed if GBP/USD rises to 1.3200.
Step 7: Specify the Lot Size (Volume)
In the ‘Volume’ field, input the trade size in lots. For example, if you want to sell 0.1 lot (equivalent to 10,000 units of GBP/USD), enter 0.1. Once the price hits your specified level, this will determine how much you’re selling.
Step 8: Set Stop Loss and Take Profit Levels (Optional)
You can also set a Stop Loss (SL) and Take Profit (TP) level when placing your SELL LIMIT order:
- Stop Loss (SL): This defines the price at which your trade will automatically close if the market moves against you. For instance, you could set your Stop Loss at 1.3300 to limit potential losses if GBP/USD rises further after triggering your order.
- Take Profit (TP) defines the price at which your trade will automatically close in profit. In our example, you might set your Take Profit at 1.3000, anticipating that GBP/USD will fall after reaching 1.3200.
Step 9: Set an Expiration (Optional)
You can set an expiration date and time for your SELL LIMIT order. The order will be canceled if the price does not reach 1.3200 within the specified time. If you don’t have an expiration date, the order remains active until triggered or manually canceled.
Step 10: Place the Order
After reviewing all the details, click ‘Plac’e’ (MT’4) or ‘Plac’e Order’ (MT’5) to submit your SELL LIMIT order. Once placed, your pending order will appear in the ‘Trad’e’ tab’ (MT4) or the ‘Toolbox’ tab’ (MT5).
Example: SELL LIMIT GBP/USD at 1.3200
Let’Let’sak through a practical example:
- Current Price of GBP/USD: 1.3100
- SELL LIMIT Price: 1.3200
- Lot Size (Volume): 0.1 lot
- Stop Loss: 1.3300
- Take Profit: 1.3000
In this scenario, GBP/USD is currently trading at 1.3100, and you expect the price to rise to 1.3200 before reversing downwards. You place a SELL LIMIT order at 1.3200, meaning that once the price rises to 1.3200, your short (sell) position will be triggered.
To manage risk, you set a Stop Loss at 1.3300, limiting potential losses if the price rises instead of reversing. On the other hand, you set a Take Profit at 1.3000, which will automatically close your trade when the price falls to that level, locking in your profits.
Monitoring and Managing the Trade
Once the SELL LIMIT order is placed, you can monitor it in the ‘Trad’e’ tab’ on MT4 or the ‘Toolbox’ tab’ on MT5. The order will remain inactive until the price rises to 1.3200. After the price hits 1.3200, your order will be executed, and you will be in a short position.
You can modify or cancel the order before it’s triggered by right-clicking on the pending order and selecting ‘Modify’ or ”Dele’te.’ After the trade becomes active, you can manage it by manually adjusting the Stop Loss and Take Profit levels or closing the position.
Why Use a SELL LIMIT Order?
A SELL LIMIT order is a great tool when you anticipate that the price will rise to a certain level and then reverse. However, it is only used in reversion trading strategies, where traders expect an asset to reach a resistance level (like 1.3200 in our example) and then fall.
Instead of entering the trade too early, a SELL LIMIT order allows you to automate the process, entering the market only when your desired price is reached. This helps avoid missing out on trading opportunities and reduces the need for constant market monitoring.
Key Benefits of Using a SELL LIMIT Order:
- Precise Entry: You can set the exact price for entering a short position.
- Automated Trading: The order is automatically triggered when the price reaches your set level, helping you avoid emotional trading decisions.
- Risk Management: You can set Stop Loss and Take Profit levels to manage risk and lock in profits efficiently.
Conclusion
Placing a SELL LIMIT order on MT4 or MT5 is an effective way to enter the market at a higher price point, anticipating a reversal. It’s beneficial in trading strategies where traders expect the price to rise to a resistance level and then fall. Following the steps outlined in this guide, you can easily place a SELL LIMIT order on either platform.
Whether buying GBP/USD or another currency pair, a SELL LIMIT order helps you automate your trading strategy. It ensures you enter the market at optimal prices without constantly monitoring the charts.
He is an expert in financial niche, long-term trading, and weekly technical levels.
The primary field of Igor's research is the application of machine learning in algorithmic trading.
Education: Computer Engineering and Ph.D. in machine learning.
Igor regularly publishes trading-related videos on the Fxigor Youtube channel.
To contact Igor write on:
igor@forex.in.rs
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