Trade Stock Indices

Entry Order in Indices and Limit Order in Indices

A limit order buys or sells an index at a set price in a pullback zone. It expects the price to bounce before continuing the trend. Traders use them for better entry prices. Most platforms offer this, like MT4 in our example.

This entry approach can open a buy trade below a stock market level during a bullish pullback or execute a sell trade above a stock market level during a bearish pullback.

Buy limit - When buying, your entry buy limit is opened/executed when trading market falls to your set price. (pulls back downward)

Sell Limit - This order is triggered when the market price for selling reaches your predetermined level. (moving up again)

Traders establish buy orders when anticipating a price rebound subsequent to reaching a specific level.

  • Entry Buy Limit buy at a level below the present market level.
  • Entry Sell Limit sell at a level above present market level.

Buy Entry Limit Example

In the stock examples below, a buy limit opens a trade below current price. Point B marks the spot.

Limit Buy Order Entry Placed to Buy Below the Current Market Price

Limit buy order entry placed to buy below current price

The stock price subsequently corrected downwards and reached the buy limit entry level. After this pending buy limit order was triggered, the price continued its upward trajectory, following the initial direction of the Indices uptrend, resulting in an active buy position.

Indices Price Hits Buy Limit Order, Order Now Changes to a Buy - Entry Limit Order

Index Price hits buy limit, order now changes to a buy

Sell Entry Limit Order

In the stock example shown below, the sell entry limit was set to sell at a price above the current market price. This is the price where the stock will pull back.

entry limit sell order placed to sell above the current market price - Entry Limit Trade Order

A pending sell limit order placed with the intention to execute a short position above the current market rate.

Subsequently, the stock index value saw an upturn, reaching the designated sell entry ceiling, following which the stock valuation continued its descent in alignment with the initial bearish direction of the Index.

Indices Price Hits Sell Limit Order, Order Now Changes to a Sell Trade Order - Entry Limit Order

Index Price hits sell limit, order now changes to a sell

When the price of indices hit a certain level, the order to trade changed to selling: this is a good way to buy or sell stocks at a better price after the price moves back a bit.

Setting Buy and Sell Limit Orders in MT4 Platform

To place pending orders in MT4, right-click the chart. Pick "Trading," then "New." In the window that opens (shown below), set "Type" to "pending," not market. Choose "Buy Limit" or "Sell Limit" for your pending buy or sell order.

Setting Buy & Sell Limit Orders in the MT4 Platform - Buy Limit Order & Sell Limit Order - Pending Orders

Putting Buy & Sell Limit Orders in MT4 Platform

Sometimes, it's hard to pick the price where you want to place your trade: if it's too far, your order might not happen, but the best thing to use is the Fibo retracement indicator, using the 38.20% retracement levels. Many traders watch this level, and orders tend to gather there, so you have a better chance of catching a trade by using the 38.2% Fibonacci retracement level.

Fib Retracement Tutorial Guide - Fib Retracement Lesson Guide

Guidance: When planning a definitive take-profit (TP) level - not a retracement level - in online Stock Index trading, leveraging the 100% level of the Fibonacci expansion can pinpoint optimal profit-taking zones. For a deeper understanding of Fibonacci Retracement and Expansion within Stock Indices contexts, please navigate to the Technical Analysis section using the provided menu.

Fibonacci Expansion Tool Lesson - Fib Expansion Tool Lesson

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