A pending order is an instruction to automatically execute a trade once an asset’s price reaches a specified future level. Using pending orders allows traders to automate market entries without needing to watch charts continuously.
When setting any pending order, it is essential to factor in the spread (the difference between the Ask and Bid prices). Buy orders execute at the Ask price, while Sell orders execute at the Bid price.
Pending orders fall into two main categories: Stop Orders (designed for trend breakouts) and Limit Orders (designed for price rebounds).
Stop Orders
Buy Stop — an order to buy at a price higher than the current market price. Placing such an order makes sense if you want to wait for the price to rise above a certain level (for example, a resistance level) and only then open a buy trade expecting the price to continue rising.
Sell Stop — an order to sell at a price lower than the current market price. Placing such an order makes sense if you want to wait for the price to fall below a certain level (for example, a support level) and only then execute a sell trade expecting the price to continue falling.
Limit Orders
Buy Limit — an order to buy at a price lower than the current market price.
Placing such an order makes sense if you want to wait for the price to fall and then bounce off a certain level (for example, a support level) and only then execute a buy trade expecting the price to continue rising.
Sell Limit — an order to sell at a price higher than the current market price.
Placing such an order makes sense if you want to wait for the price to rise and then bounce off a certain level (for example, a resistance level) and only then execute a sell trade expecting the price to continue falling.
Using pending orders allows you to automate your market entries with precision, whether you aim to trade in the direction of an emerging trend or capitalize on anticipated price pullbacks. Combined with appropriate Stop Loss and Take Profit parameters, they provide a reliable, structured way to execute your trading plan without constant market monitoring.