Entering a trade is a crucial part of the trading process. So today we cover order types within MT4, plus how and why to use them.
MT4 offers two styles of order
- Market Execution
- Pending Order
The main difference between the two order types are that market execution orders are live at market, whilst pending orders can be set in advance and require prices to cross a predefined threshold to trigger the trade order.
- To select an order type within MT4, open a deal ticket by either pressing the F9 command or double clicking on an instrument within the “Market Watch” window.
- Use the dropdown menu under “Type:” to select market execution or pending order
- The deal with will update to show the relevant options available for that order
There are four ways to initiate trades within MT4
- Deal ticket
- One click trading button
- Set orders on the chart
- DOM window (depth of market)
Using MT4’s Deal Ticket
Market Execution orders are placed “at market”, which means they are entered immediately at the next available price once the trader clicks a buy or sell button. Depending on the volatility of markets and liquidity available relative to your order size, the order may not be filled at the exact price you see on the screen.
Market orders are a popular method of entry for intraday traders such as scalpers and news traders, but also useful for anyone who wants to enter the market immediately without waiting for a key level to be breached.
The following user inputs can be modified on a Market Execution Deal ticket
- Symbol: This drop-down menu allows the user to change the market of the ticket
- Volume: This is how many lots the trade is for. Lot size varies between markets.
- Stop Loss: If a protective stop loss is required, input the number here.
- Take profit: If you want to automatically close the trade if your target is hit, input the trade price target here.
- Comment: This shows up on your trading history and can be useful if you want to monitor the success of a particular strategy
- Buy by Market: This initiates a long trade (the trader anticipates prices will rise)
- Sell by Market: This initiates a short trade (the trader expects prices to fall)
Pending orders require the user to input a level that needs to be breached for the trade to be activated. This is a popular method of entry for “set and forget” traders, end of day traders (EOD) and breakout traders.
Most of the user-defined inputs are similar to the market execution ticket. However, there are two types of pending order, which we will explain in detail now.
Limit Orders vs Stop Orders
‘Stop orders’ are effectively market execution orders which are set with a predefined level to enter the market. Like a market execution order, there is no guarantee the trade will be filled at your exact requested price if the quote skips beyond your set level.
‘Limit orders’ must be filled at your requested entry price or better. This differs from a stop order (and market order) which won’t necessarily be filled at the desired price once the trade has been triggered.
As limit orders and stops order are available for bullish and bearish bets, there are four pending order types to choose from within MT4’s deal ticket.
- Buy Stop
- Sell Stop
- Buy Limit
- Sell Limit
Using MT4’s One Click Trading Button
A 1-click button is ideal for intraday traders. It places an (almost) instantaneous market order by simply clicking the ‘sell’ or ‘buy’ button.
It is a simple, yet fast and efficient interface which allows the trader to input their lot size in the centre white box. The interface will change to blue if current quote is higher than the previous quote, or red if current quote is lower than the previous quote.
There are three ways to activate the one click trading button within MT4
- Hit Alt + T
- Right mouse click, select ‘One Click Trading’
- Click the small triangle in the top-right corner of the chart
Stop losses (SL) and take profits (TP) must be added afterwards though, so if you want a predefined SL or TP then the deal ticket must be used with a market order. Alternatively, TP and SL can be added by double clicking on the open order within the ‘trade tab’.
Setting Pending Orders Directly On An MT4 Chart
The advantage of placing orders directly on chart is it allows the trader to pinpoint a technical level for trade entry, visually.
To do so, hover the mouse over the desired level for the pending order to be placed, right mouse click and select with buy limit or sell stop. If your mouse is above the current chart price, sell-limit will show up by default. Whereas if the mouse is beneath the current quote price, buy-limit will show up by default.
For place stop pending orders, go to the ‘Trading’ menu item.
Using MT4’s DOM (depth of market) to place orders
Whilst the title of DOM suggests it shows actual depth of market, sadly this feature is not present within MT4. However, it does allow pending orders to be setup (buy/sell stop, buy/sell limit) with a predefined TP (take profit) and SL (stop loss) in place.
Ultimately this is a price ladder which lets traders enter orders very close to current price action, so is an ideal tool for scalpers.
There are two ways to activate the DOM interface
- Alt + B
- Right mouse click on a chart, select “Depth of Market”