How Using Limit Orders Will Increase Your Trading Performance
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#445: How Using Limit Orders Will Increase Your Trading Performance
In this video:
00:29 – I use Limit Orders on all of my trades
01:12 – Limit orders are the key to high reward:risk trades
02:23 – Other benefits of using limit orders
03:00 – Client trading for Prop firm credits limit order with an improvement in his trading results
05:12 – Consider Blueberry Markets if you are looking for a good Forex broker
06:13 – Enjoy your trading more by using Limit orders
I’m going to talk about limit orders, why I use them all the time in my trading, and how they can help make a massive change in your trading results. Let’s talk about that and more right now.
Hey traders, Andrew Mitchem here, the owner of The Forex Trading Coach, with the video and podcast number 445.
I use Limit Orders on all of my trades
Now, I want to talk about limit orders. I use them on all of my trades. They’re an incredible way of trading that will help you massively. So when you see a trade, you’ve got a few options. You can enter straight away at the market, and you’re literally pressing buy or sell, put your lot size in that you require, and you’re in the market straight away. You can use a breakout of a range that’s called generally a buy stop or a sales stop. A buy stop is to buy somewhere above the current price, and a sales stop is to sell somewhere below the current price.
It’s okay if you’re trading breakouts, etc., like that, but it’s not generally a great way in terms of increasing the reward to risk of your trades.
Limit orders are the key to high reward:risk trades
However, the key to trading successfully with high reward to risk trades is to use limit orders, retracement orders. So, I use buy limits to buy lower than the current price and to sell higher than the current price. Price is always moving around. It obviously moves up down, very rarely does it move sideways, but it’s always moving. And even if you get, let’s say, an uptrend, within that uptrend, you’re always going to get pullbacks. Nothing just goes dead straight line.
And so, very rarely will you see a candle on your charts, especially a good setup candle and especially one on the longer timeframe charts that just opens at the absolute low and just go straight up. Very rarely does that happen. It can happen from time to time, but not very often. Most of the time you will see a, let’s say, there’s a good bullish set up most of the time within the next candles formation. You’ll see the price drop first, and then go back up again. The opposite with a sale trade, you will see that the price will first get higher and then it will drop. That’s how we take advantage of limit orders.
Other benefits of using limit orders
Now the other great thing is apart from not needing to be there at the exact time the price hit your entry level, because you can just place your buy limit or your sell limit and basically leave the trade alone to get filled. The other good thing with it is it takes the stress and the motion out of your trading, because it’s not like the candles closed and you’re ready now, trying to get straight into the market on the mouse or the keyboard, or trying to work at your position size or stressed about missing the next trade, because we’re not jumping in straight away at the market. Makes a massive difference.
Client trading for Prop firm credits limit order with an improvement in his trading results
Now, the other thing is also, a client of ours, Ryo, who lives over in Singapore, he’s one of our many traders who are successfully trading through prop firms. He was interviewed by the group called the Five Percenters, and I’ll put a link to that interview on here so you can see it. He said that apart from the actual strategy and the coaching that we’ve given him, the thing that made the biggest difference to his trading performance was the knowledge that he has after doing the course, the use of limit orders, and how it made a massive difference to his trading.
When you think about it in simple terms, let’s say you had a very simple trade, you’re entering at the market with a 50 pip stop loss and a 50 pip profit target. That basically gives you a one to one trade in round numbers. Of course, there’s a little bit of adjustment for spreads and stuff. So you probably actually less than one to one, but let’s call it one to one. You could enter at a, let’s say you are buying, you could enter at a higher level, and therefore using the same scenario, you might end up with a 40 pip profit target using the same profit and same loss. You may, therefore, have a 60 pip stop loss. Now, you’re certainly below one to one reward to risk, and you’re at about 0.8.
And so, the other way of doing this is, let’s say in your buy trade, you bought at a level that’s below the current price and the price pulls back, gets filled, and then heads up in your anticipated direction. You may now have on the same trade, a 70 pip profit target, but only a 30 pip stop loss. That gives you a 2.3 to one reward to risk trade. A massive difference.
Let’s say you’re risking 1%, again, just for ease of numbers. On the stop trade, you might make 0.8% gain, but you’ve risk one. On the market order, you’ve made 1% gain, and you’ve risk one. The way I trade with limit orders, you’ve still risked that 1%, but you’ve made a 2.3% gain on your account. You see how that massively can increase your account?
Consider Blueberry Markets if you are looking for a good Forex broker
Talking of accounts, if you are looking at a new broker or you’re just getting into trading and you’re looking for somewhere to put your funds with a really good solid high performing brokerage, then I can highly recommend you take a look at Blueberry Markets. They’re based in Australia, but they have bases all over the place, and it doesn’t matter where you live, unless you’re in the US and a couple of other countries. Pretty much, everybody can open. Everybody else can open an account with Blueberry Markets. Really good guys. I know them personally, they’ve look out for our clients extremely well.
We have a lot of people that do trade through Blueberry plus, of course, other brokers as well. But if you’re looking for a good broker, I think that they will be one that you should seriously consider. Do your due diligence, go through and check them out. Contact them. You probably will not find better customer service anywhere, but go and do your due diligence, but check them out. I’ll put a link here to Blueberry Markets over in Australia as well on this post.
Enjoy your trading more by using Limit orders
So I hope that helps. Limit orders, retracement orders, they’re a fantastic way to massively boost your trading performance, to make your trading more enjoyable, more relaxed, and they will certainly change the way that you think about trading once you use them properly. Of course, you still need the setup candle and the right strategy, and we can help you with that. But once you’ve got that, limit orders are definitely the way to go. I’ll see you this time next week. This is Andrew Mitchem here at The Forex Trading Coach. Bye for now.
Episode Title: #445:How Using Limit Orders Will Increase Your Trading Performance