A pending order is automatically executed when the price of a product reaches or exceeds a specific price. Pending orders are classified into limit orders and stop orders.
Limit Orders:
1. Buy limit:
The price is set below the current market ask price, indicating that you are willing to enter the position at the price set or lower. The order executes only if the market price reaches or falls below the specified price, typically used when expecting a potential rebound after the market price falls to a certain level.
2. Sell limit:
The price is set above the current market bid price, indicating that you are willing to enter the position at the price set or higher. The order executes only if the market price reaches or exceeds the specified price, typically used when expecting a potential decline after the market price rises to a certain level.
Stop Orders:
1. Buy stop:
The price is set above the current market ask price, indicating that you are willing to enter the position at the price set or higher. The order executes only if the market price reaches or exceeds the specified price, typically used when expecting a potential upward movement after the market price rises to a certain level.
2. Sell stop:
The price is set below the current market bid price, indicating that you are willing to enter the position at the price set or lower. The order executes only if the market price reaches or falls below the specified price, typically used when expecting a potential decline after the market price falls to a certain level.
Stop Limit Orders:
1. Buy stop limit:
The stop price is set above the current market ask price. Once the stop price is reached or exceeded, a buy limit order is activated at the specified limit price (or lower). Typically used when expecting a continued upward movement but wanting to avoid entering at a price higher than your acceptable limit.
2. Sell stop limit:
The stop price is set below the current market bid price. Once the stop price is reached or falls below, a sell limit order is activated at the specified limit price (or higher). Typically used when expecting a continued downward movement but wanting to avoid entering at a price lower than your acceptable limit.
