Prompted by another thread here’s a quick recap of pending orders with a memory jogger graphic, hope it helps.
A pending order is simply a buy or sell command sitting waiting at a chosen price level, they can be a very useful means of placing an order with your broker.
Two main advantages are i) Allows you to place a trade without having to be at the terminal, and ii) it automates the trigger pulling part of trading, which can help if traders want to reduce their subjective influence over this often difficult operation.
These are the four types to learn:
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SELL STOP - place this order below the current price. Your expecting price to drop, trigger your sell, and continue falling. This could be used where your looking for the breakdown of a previous low.
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BUY STOP - place this order above the current price. Your expecting price to rise, trigger your buy, and continue rising. This could be used where your looking for the break above a previous high.
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SELL LIMIT - place this order above the current price. Your expecting price to rise, trigger your sell, and reverse direction. This could be used where you believe a resistance level will hold.
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BUY LIMIT - place this order below the current price. Your expecting price to fall, trigger your buy, and reverse direction. This could be used where you believe a support level will hold.
So stop orders are for an expectation of continuing in the same price direction, limit orders are for an expectation of price direction reversal. Here is how you would place them on your chart:
If your using MT4 platform here is how your set up these orders (other platforms are very similar):
