Mastering Order Types in MT5: Market, Pending, and Stop Orders Explained
3/24/2025, 10:41:55 AM
Different order types in MT5 can be advantageous for you. Understand the purpose of each order type and specific uses to create your edge in trading.
Mastering Order Types in MT5: Market, Pending, and Stop Orders Explained
The MetaTrader 5 (MT5) is a popular trading platform that offers advanced charting, algo trading, and various methods to execute orders. You can access multiple trading assets, including currencies, commodities, and indices, making it a versatile platform for beginners and advanced traders.
Understanding Order Types in Trading
Order types are important as they determine when and how your trades are executed. Using the right order type can maximize your profit potential whether you are a scalper, day trader, or swing trader. Many traders fail not because of poor strategies but due to bad execution. To build a solid foundation, you should know about market orders, pending orders, and stop orders.
If you master these concepts, you can:
Improve your entry and exit points
Reduce emotions in trading decisions
Optimize your risk-reward ratio
Market Orders in MT5
A market order is like an instruction to buy or sell assets at the current market price immediately. These orders are executed instantly, unlike pending orders that require certain conditions to be fulfilled.
Pros and Cons of Market Orders
Pros:
Instant execution
Suitable for fast-moving markets
Useful in scalping
Simple and easy to use
Cons:
Slippages may occur
Less control over trade execution
When to Use Market Orders in Trading
The best scenarios to use market orders are when:
You want immediate order execution.
Markets are moving quickly.
Trading highly liquid assets that have less risk of slippage.
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Pending Orders in MT5
Pending orders allow you to execute trades at your predetermined levels rather than at the current market price. There are four types of pending orders:
Buy Limit: It is a pending order to buy an asset below the current market price. It is ideal for buying at a support level during correction.
Sell Limit: It is an order to sell an asset above the current market price. It helps to short-sell at the resistance level.
Buy Stop: It is a buy order used to catch the bullish breakouts. You can place a stop above the current market price.
Sell Stop: It is a sell order used to catch a bearish breakout by putting an order below the current market price.
How to Place Pending Orders in MT5
Click New Order in the trading terminal.
Select Pending Order.
Choose a specific type like Buy Limit, Sell Stop, etc.
Set the desired entry price.
Adjust Stop Loss and Take Profit levels as per your strategy.
Click Place Order to confirm.
Use Cases for Different Types of Pending Orders
Buy Limit & Sell Limit:
These order types are ideal for trade retracements. For example, you can put a buy limit order when the trend is strongly bullish and the price retraces down to a support level.
Buy Stop & Sell Stop:
These orders are best to trade breakouts during strong momentum.
Stop Orders in MT5
Stop orders help you manage your risk and lock profits. The two major stop-order types are:
Stop Loss (SL): It is used to close a position when the price hits a predefined loss level. It is used to prevent excessive drawdown.
Take Profit (TP): It is used to close a position in profit when the price reaches your desired level. It helps to secure the profit before the market turns against your position.
How the Stop Orders Help in Risk Management
Using stop orders ensures that:
Losses remain capped at acceptable levels.
Profits are booked before a reversal occurs.
Emotions during trading are minimized.
A stop order placed at key spots works as a safety net, which ensures your positions stay aligned with your strategies without being caught in market noise.
Common Mistakes Traders Make with Stop Orders
Tight Stop-loss:
Your positions need a space to breathe. Too tight stops will be triggered soon and leave you in losses.
No Stop-loss:
You are exposed to huge risks that can wipe your entire account.
Too Far or Too Narrow Take Profit:
Chasing unrealistic targets may deprive you of a fair profit. Hence, you need to use take profit order at a reasonable level.
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Best Practices for Using Order Types in MT5
Smart traders use a mix of different order types to refine their strategies:
Putting a buy limit order at support with stop-loss to manage risk.
Putting a buy-stop order before a news release to catch the breakout.
Using market orders while scalping in a fast-moving market.
Tips for Beginner Traders in Setting Orders Correctly
Test different order types in a demo account before using them on a live account.
Tweak your strategy with different order types to create your advantage.
Adjust your strategies to handle undesirable moments like slippages.
Always set stop-loss to protect your capital.
Risk Management Strategies with Different Order Types
Market Orders:
You can use market orders when the markets have high liquidity and narrow spreads.
Pending Orders:
You can use pending orders to bring precision to your entries and improve the risk-reward ratio.
Stop Orders:
Adjust your SL and TP based on market conditions. You can also lock your profit by moving SL to breakeven or above after certain conditions are met.
Conclusion
Understanding different order types is crucial for traders to use them to their advantage. Each order type has a certain purpose. If you know them well, you can enhance your profitability and reduce your risk.
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