Pending orders are instructions you give to your broker or trading platform to open or close a position when the market reaches a price you specify. Instead of clicking “buy” or “sell” at the current market price, you set conditions in advance so the platform executes the trade automatically if those conditions are met. For many retail traders this is a practical way to manage entries and exits without watching the chart every minute. This article explains the main types of pending orders, how they work in practice, common reasons a pending order may not fill, and the risks to keep in mind.
What a pending order does and why traders use them
A pending order lets you plan trades ahead of time. You might use a pending order because you expect a price to return to a support zone before you want to buy, or because you want to enter only after a breakout above resistance. Traders also link pending orders with stop-loss and take-profit levels to define risk and reward at the moment an order is placed, which helps enforce discipline and reduces impulsive decisions.
Imagine EUR/USD is trading at 1.1000. You think the pair will dip to 1.0950 and then bounce, so instead of waiting at your screen you set a buy-limit at 1.0950. If the market falls to that level, the platform will place the buy automatically. If the price never reaches 1.0950, nothing happens and you keep your cash or margin available.
Main types of pending orders
There are several pending orders commonly available on retail platforms. Which exact names or extra types your broker offers can vary, but the core ones are:
- Buy Limit: an order to buy at a price below the current market price. Use it when you want to pick up a dip.
- Sell Limit: an order to sell at a price above the current market price. Use it when you expect price to rise to a resistance and then reverse.
- Buy Stop: an order to buy at a price above the current market price. Use it when you want to enter after a breakout to the upside.
- Sell Stop: an order to sell at a price below the current market price. Use it when you want to enter after a downside breakout.
- Buy Stop Limit / Sell Stop Limit: two-stage orders that first trigger on a stop price and then become a limit order at a specified price.
These types cover most entry strategies: buying on pullbacks (limits), buying on breakouts (stops), and hybrid approaches that avoid immediate market fills (stop-limit).
How limit, stop and stop‑limit orders differ in practice
Limit and stop orders may look similar because both refer to a target price, but they serve different purposes. A limit order guarantees you will not be filled worse than the limit price — it executes only at that price or better. The tradeoff is that the market may not reach your limit and your order may remain unfilled. A stop order is a trigger: when the market hits the stop price, the order becomes a market order and fills at the next available price. That means you can be filled worse than the stop price in fast-moving markets (slippage), but the order is much more likely to execute.
A stop-limit order sits between the two. When the stop price is reached the platform places a limit order at a preset price. If the market moves past that limit without offering liquidity at your price, the order may not fill, avoiding unwanted slippage but risking non-execution.
For example, suppose USD/JPY trades at 110.00. You want to buy if price breaks above 110.50 but only if it can be bought at 110.45 or cheaper after the breakout. You might set a buy stop at 110.50 with a limit at 110.45 (buy stop‑limit). If the breakout blasts through and never retraces to 110.45, your limit won’t fill.
Setting expiration and linked orders
Pending orders can usually be left open until canceled or given an expiration time. Common time-in-force options are “Good Till Cancelled” (GTC) and “Good For Day” (GFD). Some platforms also support “Good Till Date” so you can pick a specific expiration.
You can also tie orders together. Two commonly offered conditional combinations are One-Cancels-the-Other (OCO), where executing one order cancels the other, and One-Triggers-the-Other (OTO), where the execution of an initial order places subsequent orders such as stop-loss and take-profit. These tools let you automate entry and exit rules so the trade behaves as planned after execution.
Placing pending orders on trading platforms (step by step, conceptual)
Different platforms use different menus, but the process follows the same logic. First, choose the symbol and volume you want to trade. Then select a pending order type rather than “market execution.” Enter the price that should trigger the order and, if applicable, the limit or stop‑limit price. Finally, attach risk management levels such as stop-loss and take-profit and set an expiration mode if you want the order to lapse automatically.
On many charting platforms you can click the chart at the level you want and choose “New Pending Order,” which pre-fills the price for convenience. Always double‑check whether the platform uses Ask or Bid to trigger buy vs. sell pending orders—this matters because buy orders are usually executed on the Ask and sell orders on the Bid.
Why a pending order might not execute
There are several practical reasons a pending order may remain unfilled. The simplest is that the market never reached the price you set. But technical and broker-specific causes matter too. Spreads and the difference between Bid and Ask mean a buy limit will only trigger when the Ask reaches the level, while a sell limit depends on the Bid. Brokers often enforce a minimum distance between the current price and where you can place a pending order, especially during low-liquidity hours. Rapid moves during news events can skip over prices (gapping) so an order might trigger but fill at a worse price, or in the case of stop-limit it might not fill at all. Finally, insufficient margin in your account can prevent execution if the broker requires margin to reserve the trade.
Practical examples and how traders use pending orders
Traders use pending orders for a variety of tactical reasons. A swing trader might place buy limits at several levels below the current price to scale into a position if a pullback occurs. A breakout trader often uses a buy stop above a consolidation zone to catch momentum when price breaks higher. A trader on holiday can set an OCO order to open a position at a breakout and simultaneously place a stop-loss and take-profit so the trade is managed while they’re away.
For instance, imagine GBP/USD is forming a triangle with resistance at 1.3300. You believe a breakout higher will continue, so you place a buy stop at 1.3305 with a stop-loss below the breakout candle and a take-profit at the next resistance. This setup avoids entering on false moves below the breakout and automates risk management at the moment of entry.
Risks and caveats
Using pending orders reduces the need to watch the market constantly, but it does not remove risk. Pending orders can be subject to slippage in fast or illiquid markets; a stop order may execute at a worse price than the one you set. Limit orders avoid negative fills but can leave you unentered if the market never returns. Broker rules, spreads, trading hours, and minimum distance requirements can change how orders behave; always check your broker’s specifications. Conditional orders such as stop-limit or OCO add complexity and require careful testing on a demo account before using live funds. Most importantly, trading foreign exchange involves risk of loss and is not suitable for everyone. This article is educational only and does not constitute personalized trading advice.
How to practice and build confidence
Before using pending orders with real money, try them on a demo account. Place the different types of pending orders and watch how they behave when price approaches your levels. Note how Ask/Bid differences affect buy versus sell triggers, and observe how orders behave during periods of low liquidity and around major economic releases. Practicing in realistic conditions helps you understand the tradeoffs between guaranteed price (limit) and guaranteed execution likelihood (stop market).
Key Takeaways
- Pending orders let you automate entries and exits by telling your platform to trade when price reaches levels you choose.
- Limit orders execute at your price or better; stop orders trigger market fills and can suffer slippage; stop-limit orders trigger a limit order that may not fill.
- Pending orders can save time and enforce discipline, but they can fail to execute because of spreads, broker rules, volatility, or insufficient margin.
- Trading carries risk; practice with a demo account and check your broker’s order rules before using pending orders with real money.
References
- https://mondfx.com/what-is-pending-order/
- https://fbs.com/glossary/pending-order-215
- https://www.babypips.com/learn/forex/types-of-orders
- https://cfi.trade/en/educational-articles/trading-essentials/how-pending-orders-work
- https://www.youtube.com/watch?v=slxIFsvKxQU
- https://itbfx.com/forex/pending-orders/
- https://www.oanda.com/bvi-en/cfds/learn/introduction-to-leverage-trading/order-types-explained/