Why are pending orders important?

Pending orders are requests to buy or sell an instrument when certain conditions specified by you are reached. This might help you to reduce risk and increase your profit.

When it comes to pending orders, there are two types - pending limit orders and pending stop orders. The key difference between them is that a limit order allows you to set the maximum price you are willing to pay when buying shares or the minimum amount to get when selling shares. The stop order, on the other hand, is triggered once a pre-specified price is reached.

With pending orders, you can make a profit, reduce risk, and protect yourself against losses, even when you are not actively trading or without having to track the markets all day. For example, you can place a pending sell order at a pre-specified price higher than the one you have purchased assets for. If the price reaches that level, the trade will be automatically executed. Respectively, you can set a pending sell order, and if the price of the instrument drops to the pre-specified level, the order will be executed and any further losses will be prevented.

Using pending orders can also be used to automate trading methods. You can set up a pending buy order at a certain level and then a pending sell order at a higher level. If the price rises to the pending buy order level, the selected number of shares will be bought. If the price rises even further and reaches the sell order criteria, it will be executed as well, and you will profit from the difference between the two orders. This type of trading strategy can be used for short-term market movements and to make profitable trades.