Explaining Limit Order?
Where do you set them? Back testing your system can be beneficial here. You can check through the last months and years of markets that would trigger a trade under your system and figure out what would have been the optimal setting for the limit order. Remember naturally that past results aren’t necessarily going to be repeated in the future. Testing in a demo account is also useful.
Mostly you’ll want the limit order to be further from your starting point than your stop-loss, even after spread is considered. This will mean that you just have to score a 50% success rate to be in profit. Setting the limit order at 2 times the pips of the stop loss, either before or after spread, could be appropriate. this is dependent on your system. Don’t skip over the testing.
Using limit orders has another valuable benefit too. When you have both stop loss and limit order prepared you can run away from the computer and get on with your day. There is not any need to look at every tiny fluctuation of price till one or the other one is caused. This reduces stress and makes it less sure that you will panic and vary from your original plan. So using limit orders in foreign exchange trades leads to a happier, more profitable trader.