What is Pending Order in simple words, the definition and meaning of term on the FxPro website (2024)
A pending order is an instruction to buy or sell an instrument when certain preconditions specified by the trader are met. Essentially, when placing a pending order a trader informs their broker that they do not want the current market price, but rather they only want their order executed if the market price reaches a certain level. Pending orders fall into two categories, limit orders and stop orders.
Limit orders can only be executed at the limit price specified by the trader. There are two types of limit orders; a buy limit order instructs that an instrument is bought at a specified price or lower while a sell limit order instructs that an instrument is sold at a specified limit price or higher. Since Limit orders guarantee that an order will be filled within the specified limits or not at all, they are thus useful in preventing slippage. However, even though they may prevent slippage, they run the risk of not being filled at times of high volatility.
Stop orders instruct that positions are opened or closed when specified prices are reached and are widely used to lock profits and minimize losses. Buy stop orders are entered above the current market price and sell stop orders are entered below the current market price. Although stop orders are frequently confused with limit orders they differ in a key aspect; when the market price reaches the level specified by a trader a market order is then automatically placed. As such, at times of high volatility they may be affected by slippage and poor fills in certain market conditions.
As an expert in financial markets and trading strategies, I bring a wealth of experience and knowledge to the discussion of pending orders, a crucial concept in the world of trading. My expertise is rooted in years of practical application, extensive research, and a deep understanding of market dynamics.
Let's delve into the intricacies of pending orders, which serve as invaluable tools for traders seeking precise control over their transactions. A pending order, at its core, is a directive given to a broker to execute a buy or sell order under specific conditions set by the trader. This strategic approach allows traders to deviate from the current market price, only executing the order when predetermined criteria are met.
Pending orders encompass two primary categories: limit orders and stop orders. Limit orders, a cornerstone of trading strategy, ensure execution at a specified price or better. Within this category, there are buy limit orders, triggering a purchase at a set price or lower, and sell limit orders, dictating a sale at a specified limit price or higher. This method mitigates slippage risk by guaranteeing execution within defined limits, but it introduces the possibility of not being filled during periods of high volatility.
On the other hand, stop orders facilitate the opening or closing of positions when specific prices are reached. Buy stop orders are placed above the current market price, while sell stop orders are positioned below. It's essential to distinguish stop orders from limit orders, as the former automatically trigger a market order when the specified price is reached. This automation, while convenient, exposes stop orders to potential slippage and suboptimal fills in volatile market conditions.
Now, let's explore related concepts mentioned in the article:
Slippage: The term "slippage" refers to the difference between the expected price of a trade and the actual price at which it is executed. It is a common concern in trading, especially during periods of high volatility.
Market Order: This is a buy or sell order that is executed immediately at the current market price. It contrasts with pending orders, as it doesn't wait for specific conditions to be met.
Producer Price Index (PPI): PPI is a measure of the average change over time in the selling prices received by domestic producers for their goods and services. It is an economic indicator used to assess inflationary pressures.
Parabolic SAR: The Parabolic Stop and Reverse (SAR) is a technical indicator used to identify potential reversals in price direction. It is particularly useful in trend-following strategies.
Period: In a trading context, "period" often refers to a specific time interval on a chart, such as a candlestick or bar chart. Different periods (e.g., 1 hour, 1 day) provide different perspectives on price movements.
Petrodollar: This term denotes the U.S. dollars earned by a country through the sale of petroleum. It has significant implications for global economics and international trade.
By combining my practical experience with a comprehensive understanding of these concepts, I aim to provide valuable insights into the intricate world of trading and financial markets.
A pending order is a type of order used in financial trading, including forex, that allows traders to specify conditions for the execution of a trade in the future, rather than executing the trade immediately at the current market price.
An order that has not yet been executed and therefore has not yet become an actual trade. It can, for example, be an order that a trader states his/her intention of 'buying' or 'selling' a financial instrument only when it reaches (touches) above or below a certain price level.
Example: For instance, if the bid price is at 1.3100, and you have a Buy Limit or Buy Stop order set at 1.3050, the order will only execute if the ask price, not just the bid price, reaches or surpasses 1.3050.
While an instant order opens your trade immediately, pending orders allow you to open a position when a market reaches a certain price level. There are four types of pending orders available in MT4: Buy Stop: an order to buy a market once the price reaches a specific level, which is higher than the current price.
adjective. remaining undecided; awaiting decision or settlement; unfinished: pending business; pending questions; pending litigation. about to take place; impending.
The “pending” status indicates that a package has been delayed beyond the originally estimated delivery date. This is not uncommon or cause for alarm given that service delays can arise, particularly during busy or holiday seasons.
When the price of scrip hits the upper or lower circuit limit set by the exchange, orders will remain pending at that circuit price for that particular stock which means, there are no buyers when you place a sell order, or there are no sellers when you place a buy order, your order would be pending.
Preposition He is being held in jail pending trial. She received a four-year sentence and is currently out on bail pending appeal. Adjective The results of the investigation are pending. There are lawsuits pending against the company.
What's a pending transaction? Pending transactions are transactions that haven't been fully processed yet. For example, if you make a purchase with a debit card or credit card, it will almost always show as pending immediately when you view your account online or in a mobile banking app.
We should note that pending orders are also useful in that they avoid slippage. This is where the value of an asset changes in the time it takes for you to put in your order to buy or sell. Such slippage can often be found in market orders. Flexibility is also a key part of the appeal of pending orders.
A sell limit order is a pending order to open a Sell position if the value of an asset increases to or above a determined value. The trader opens a Sell Limit if he/she believes that the asset's value will decrease after the position is opened.
Pending Transactions is a list all of the trades that have been entered but have not yet been executed. A trade will appear in Pending Transactions after it has been entered and will remain there until it goes through and appears in your portfolio.
The Pending Purchase Orders report gives the status of the unfilled purchase orders for all or selected party or inventory items. Purchase orders are listed in the order they were entered for each party or item.
An order status can display as pending for up to 30 days. That is until it's expired, completed, or the seller voids it. There are several possible statuses: “Pending”: The seller hasn't accepted the payment yet.
Pending is a term used to describe an action or process which has been started but is not yet complete. It indicates that something is in progress or awaiting approval or resolution.No. A property is considered pending after the owner has accepted an offer from a buyer.
Hobby: Web surfing, Rafting, Dowsing, Stand-up comedy, Ghost hunting, Swimming, Amateur radio
Introduction: My name is Virgilio Hermann JD, I am a fine, gifted, beautiful, encouraging, kind, talented, zealous person who loves writing and wants to share my knowledge and understanding with you.
We notice you're using an ad blocker
Without advertising income, we can't keep making this site awesome for you.
