The Four Pending Orders: Review
Put all four pending orders into one 2×2 matrix (above/below × buy/sell) and see the differences at a glance.
Risk warning: forex, CFDs, options, futures and crypto assets usually involve leverage or high volatility, and you can lose more than you put in. This lesson only teaches the concepts; all numbers are for illustration and are not investment advice.
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Text version · Forex: Pending Orders & Risk, lesson 6: “The Four Pending Orders: Review”
Put all four pending orders into one 2×2 matrix (above/below × buy/sell) and see the differences at a glance.
Limit: wait for price to come back
A Buy Limit sits below, waiting to buy cheaper; a Sell Limit sits above, waiting to sell higher. You expect the price to reverse.
Stop: wait for price to break through
A Buy Stop sits above and buys on a breakout; a Sell Stop sits below and sells on a breakdown. You expect the price to keep going.
One grid: position × direction
Buy Stop / Sell Limit go above; Buy Limit / Sell Stop go below. Put one on the wrong side and the broker rejects it or fills it at market straight away.
Key takeaways
- Limit orders wait for the price to come back: Buy Limit below, Sell Limit above.
- Stop orders wait for the price to break through: Buy Stop above, Sell Stop below.
- A pending order is just a waiting instruction; it becomes a real position only when the price touches it.
- An order placed on the wrong side is either rejected or filled immediately at market.
Try it yourself
You can do these exercises in this lesson's interactive simulation:
- Click each of the four pending orders in the grid in turn and press ▶ to play its default ★ scenario. Where does each one trigger?
- Pick Buy Limit, then switch to the "Breakout up" scenario: price rises all the way and the order never fills.
- Drag the order line to the other side of the current price and see why the broker would reject it.
- Switch to "Free drag" and drag the price label on the right up and down to trigger your order yourself.
Quiz and explanations
- 1. Which two pending orders sit below the current price?
- Answer: Buy Limit and Sell Stop.Below: buy when it's cheaper (Buy Limit), sell when it breaks down (Sell Stop).
- 2. If you expect the price to reverse, which type of pending order should you choose?
- Answer: Limit orders.Limit orders wait for a dip or bounce; Stop orders wait for a breakout to continue.
- 3. The price is 1.0850. Which of these pending orders is set up incorrectly?
- Answer: Buy Stop 1.0820.A Buy Stop must sit above the current price; 1.0820 is below, so it's in the wrong place.
Terms in this lesson
- Buy Limit: A buy order placed below the current price: you buy once price dips to a cheaper level.
- Buy Stop: A buy order placed above the current price: you buy into the move when price breaks out upward.
- pip (Pip): The smallest standard price unit in forex; for EUR/USD, 1 pip = 0.0001.
- Sell Limit: A sell order placed above the current price: you sell once price rises to a higher level.
- Sell Stop: A sell order placed below the current price: you sell into the move when price breaks down.