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EDUCATION: WHAT ARE PENDING ORDERS? HOW TO USE?

 

 

 

What is a pending order?

The Pending order is a limited trade over a fixed time frame that combines the features of stop with those of a limit order and is used to reduce risk.

The pending order (stop-limit order) will be executed at a specified price, or better after the given limit price has been reached. Once the price reached, the pending order becomes the normal order to BUY or SELL at the specified price or better.

A pending order setup requires two price points. The first point states the start of the specified action, referred to as the stop/start. While The next point referred as to the limit. A timeframe must be fixed in that the pending order is considered executable.

The primary benefit of a pending order the trader has precise control over when the order should be filled.

EXAMPLE OF PENDING ORDERS(STOP-LIMIT ORDERS)

For instance, Mr. X is trading @ $40 and an investor wants to buy the stock once it begins to show some serious upward momentum.

The investor has put in pending order to buy with the stop price at $45 and the limit price at $46; your order will only be filled if the price range crossed $45. this strategy allows you to limit your losses. However, this type of order can also be used to guarantee profits.

 

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14 Aug 2018 4:23 pm Posted by tamilforex

 
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