A pending order differs from a market order mainly in how and when it is executed. A market order is executed immediately at the current market price. When a trader places a market order, they are accepting the best available price at that moment to open or close a trade. It’s commonly used when quick entry or exit is more important than the exact price level.

A pending order, on the other hand, is executed only when the market reaches a specific price set by the trader. It allows traders to plan their entries without constantly monitoring the market. Pending orders are useful for strategies that rely on price levels, such as breakouts or pullbacks. For example, a trader might place a buy limit order below the current price to enter a trade if the market drops to a certain level.

There are four main types of pending orders: buy limit, sell limit, buy stop, and sell stop. Each serves a different purpose depending on the direction and strategy. Pending orders help traders maintain discipline and avoid emotional decisions, as trades are executed automatically when predefined conditions are met.

In short, a market order focuses on instant execution, while a pending order focuses on executing at a planned price level, giving traders more control over their entries and exits.