Introduction

If you’re trading with MetaTrader, mastering the differences between limit and stop orders is a crucial step to executing precise trades. These order types allow you to plan ahead by automating your entry into the market at specific price levels. But here’s the key: whether you’re placing a buy limit, sell limit, buy stop, or sell stop, the execution depends on the bid and ask prices, as well as the direction of your trade.

Let’s break it all down so you can use these orders effectively.

Bid vs. Ask Price: The Basics

• Bid Price: The price at which you can sell an asset (what buyers are offering).
• Ask Price: The price at which you can buy an asset (what sellers are asking).
• Spread: The difference between the bid and ask prices.

In MetaTrader:

• Buy Orders (Buy Limit and Buy Stop) are executed based on the ask price.
• Sell Orders (Sell Limit and Sell Stop) are executed based on the bid price.

This distinction is key to understanding why your orders may not execute when you expect them to.

What Are Buy and Sell Limit Orders?

Buy Limit Order

A buy limit order is placed below the current market price. It’s a request to buy only when the price falls to your specified level.

• Execution: Triggered when the ask price reaches your target price.

Example:

• Current bid/ask: 1.3010 / 1.3012
• You place a buy limit at 1.3000.
• The order executes only when the ask price drops to 1.3000 or lower.

Sell Limit Order

A sell limit order is placed above the current market price. It’s a request to sell only when the price rises to your specified level.

• Execution: Triggered when the bid price reaches your target price.

Example:

• Current bid/ask: 1.3010 / 1.3012
• You place a sell limit at 1.3020.
• The order executes only when the bid price rises to 1.3020 or higher.

What Are Buy and Sell Stop Orders?

Buy Stop Order

A buy stop order is placed above the current market price. It’s a request to buy when the price rises to your specified level, anticipating further upward movement.

• Execution: Triggered when the ask price reaches your target price.

Example:

• Current bid/ask: 1.3010 / 1.3012
• You place a buy stop at 1.3020.
• The order executes when the ask price rises to 1.3020 or higher.

Sell Stop Order

A sell stop order is placed below the current market price. It’s a request to sell when the price falls to your specified level, anticipating further downward movement.

• Execution: Triggered when the bid price reaches your target price.

Example:

• Current bid/ask: 1.3010 / 1.3012
• You place a sell stop at 1.3000.
• The order executes when the bid price falls to 1.3000 or lower.

How MetaTrader Executes Limit and Stop Orders

Buy Orders (Buy Limit and Buy Stop)

Buy orders are triggered by the ask price, not the bid price. Even if the bid price reaches your target, the order won’t execute until the ask price does.

Sell Orders (Sell Limit and Sell Stop)

Sell orders are triggered by the bid price, not the ask price. Even if the ask price reaches your target, the order won’t execute until the bid price does.

Tips for Using Limit and Stop Orders in MetaTrader

1. Understand the Spread:
   • Always account for the spread when setting your order levels.
   • Example: If the spread is 2 pips and you want to trigger a buy limit order at 1.3000, the bid price must fall to 1.2998 for the ask price to reach your level.
2. Enable Ask Price Display:
   • In MetaTrader, you can enable the ask price line for better visibility.
   • Go to Charts > Properties > Show Ask Line.
3. Plan for Volatility:
   • During news events or high volatility, spreads often widen, which may delay or prevent your orders from executing.
4. Be Prepared for Slippage:
   • Use a slightly higher or lower level for your orders to reduce the impact of slippage in fast-moving markets.
5. Limit vs. Stop Orders:
   • Limit Orders: Use when you expect a reversal from a specific price level.
   • Stop Orders: Use when you expect the market to continue in the same direction after breaking a price level.

Visual Summary

Order Type	Execution Price Trigger	Purpose	Example Setup
Buy Limit	Ask Price	Buy below market price	Current: 1.3012, Target: 1.3000
Sell Limit	Bid Price	Sell above market price	Current: 1.3010, Target: 1.3020
Buy Stop	Ask Price	Buy above market price	Current: 1.3012, Target: 1.3020
Sell Stop	Bid Price	Sell below market price	Current: 1.3010, Target: 1.3000

Conclusion

Understanding the differences between buy and sell limit orders and buy and sell stop orders is critical for trading successfully in MetaTrader. Always remember:

• Buy orders depend on the ask price.
• Sell orders depend on the bid price.

By accounting for the spread and market volatility, you can optimize your trading strategy and avoid unexpected results when placing pending orders.