We have different types of orders in the financial markets including:
- Market orders
- Pending (limit) orders
- All or None orders
- Fill or Kill orders
- Iceberg orders
- Execute and eliminate orders etc.
In retail FX market we only have the market orders and pending orders.
Market Orders
Simply means a willing buyer or seller at a current market price.
Pending Orders
Simply means a willing buyer or seller at a specified price and/or specified time.
In financial markets, pending orders are used at most compared to market execution orders. Retail FX is different.
Pending orders are specified to limit orders and stop orders.
They all specify the price of execution and have a limited time to stay in the market for execution. If that time passes, the order automatically deletes itself.
Limit Orders
- Buy Limit: A ‘buy’ pending order below the current market price.
- Sell Limit: – A ‘sell’ pending order above the current market price.
Stop Order
- Buy Stop: Willing buyers above the current market price.
- Sell Stop: Willing sellers below the current market price.
Simply put it this way, limit order anticipates a reversal and stop orders anticipate for a continuation of a trend.
