What is a Sell Limit Order
KEY TAKEAWAYS

  • Sell limit is a pending order to open a sell position at a higher price than the current market price
  • Sell limit is always a pending order until filled or cancelled
  • If filled, the sell limit order becomes a market order
  • Sell limit orders can also be set with SL and TP levels

What is a Sell Limit Order

A sell limit order is a pending order to enter a short position on a security at a specified higher price. Sell limit is a pending order used on a market trending down and it’s placed above the current market price.

A sell limit order is part of the pending orders class, where an order is placed on a broker’s platform an remains inactive until filled. Only when it becomes filled the sell limit order becomes a market order.

Sell limit orders can be placed on several financial instruments, such as stocks and Forex CFDs. Sell limit orders can be set with time parameters, with an expiry date and time, or GTC (Good till Cancelled).

A sell limit order with an expiry date will be removed from the broker’s order book, if it’s not filled by the set time. If a sell limit order is set as GTC, it will remain open on the broker’s order book until it gets filled or is manually cancelled.

Sell limit orders are a great resource for traders wanting to enter the market, but without time to check the charts constantly. By setting a pending sell limit order, traders will be sure to enter the market, even if they are logged off their trading platform, or even if they are asleep.

On the MT4 and MT5 trading platforms, pending sell limit orders can also be set in conjunction with two other pending orders; stop-loss and take-profit.

This powerful combination of sell limit, stop-loss and take-profit pending orders, due to its versality, are widely used by scalpers and by day traders expecting market price bounces.

How to Place a Sell Limit Order on MetaTrader Desktop

How to Place a Sell Limit Order on MetaTrader Desktop

Sell limit orders can be placed on MetaTrader 4 and 5 desktop versions by selecting “New Order” from the navigation tab. When the trading terminal display opens up, find the fifth option, which by default is set to “Market Execution”, click the arrow on the right once and select “Pending Order”.

The bottom half of the trading terminal display will change from instant market execution orders, with a red sell by market and a blue buy by market buttons, to “Type”. By clicking the right arrow of this menu, you will see the four market pending orders available, including sell limit order.

Select the sell limit order type, fill in the “at price” field, set the lot size, set an order expiry, set a stop-loss and a take-profit level if you wish. The sell buttons on the MetaTrader platforms, in order to be easily identifiable, are always red.

After setting all the parameters on the pending sell limit order, press the “Place” button (it will be in red colour). As mentioned before, if you didn’t set any expiry parameters for your order, then the sell limit will remain open until filled by the broker or if you cancel it manually.

How to Place a Sell Limit Order on MetaTrader Mobile

It is also possible to set sell limit orders, if you trade on the go, via your Android or iOS phone, and these orders have the same features of the sell limit orders of the MetaTrader Desktop version.

To place a sell limit order on MetaTrader Mobile, open the order terminal by touching the top right symbol that looks like a page with a “+”. The first order type that appears is the “Market Execution”, and by touching it MT4 mobile will display the four pending order types, including the sell limit order.

Select “Sell Limit”, and set all the parameters. You can select the lot size, set the sell limit price, set or not a stop-loss and take-profit level and the order expiration. When you’re ready and if you have set a correct sell limit price, touch the, now unblocked, “Place” button at the bottom of the screen.

How to Cancel a Sell Limit Order on MetaTrader Desktop and Mobile

To cancel a pending sell limit order on MT4 just maximise (if it was minimised) the “Trade” tab. You will see all the current open orders, if applicable, and on the bottom half, on the “Type” column, you will find the pending sell limit orders.

To cancel the sell limit order, without any delays, just follow the row to the right and find the grey “x”. Press that and the sell limit order will be cancelled straight away.

To cancel a sell limit order on MetaTrader Mobile, open the “Trade” tab on your mobile terminal. You will see all the open orders, if applicable, on the “Positions” divider and right below it, on the “Orders” divider, the sell limit orders.

Select the sell limit order you wish to cancel, by long pressing it. A new popup will open with 3 options. Select the second option “Delete order”, and the sell limit order will be cancelled from the broker’s book instantly. 

When Should Traders Use a Sell Limit Order?

Where to use the Sell Limit Order

Sell limit orders are a great tool for traders trading retracements on bearish trends. Different types of traders use the sell limit orders to make a profit, particularly day traders using support/resistance strategies and traders using pivot points strategies.

The sell limit order can be used on a downward trend, by placing a pending order in advance to enter the market when the price retraces to a particular point (last high, or a resistance level), ensuring a greater probability of achieving a predetermined entry price.

For example, a trader using the pivot point strategy can place one, or several, pending sell limit orders across all the resistance levels (R1, R2, and so) above the pivot point, hoping for a price bounce on these levels.

In this case, we will recommend a sell limit order with an adequate, protective, stop-loss to protect the order against any unforeseen or volatile price breakouts.

Sell limit orders are also a viable option for traders using a support/resistance strategy, by placing a pending order, triggered at a strong resistance level on a downtrend.

Conclusion

Sell limit orders are an excellent way to free traders from constantly screening a security’s price, especially for those who follow the price action of multiple instruments.

Pending sell limit orders can also be used on the stock markets (where allowed) for short selling a security, without continuously keeping an eye on the price chart.