A pending order is an instruction you give to your broker to open a trade automatically when the price reaches a certain level in the future. This means you buy or sell a financial instrument only when its market price hits the price you set in the order.
There are four types of pending orders:
Buy Limit. This order opens a buy trade when the Ask price falls to a level lower than the current price. Traders use it when they expect the price to drop first, then go back up.
Buy Stop. This order opens a buy trade when the Ask price rises above the current price. Traders use it when they believe the price will keep going up after breaking a certain level.
Sell Limit. This order opens a sell trade when the Bid price rises to a level higher than the current price. Traders use it when they expect the price to go up first, then fall.
Sell Stop. This order opens a sell trade when the Bid price falls below the current price. Traders use it when they expect the price to drop and continue going down.