A market order is to buy or sell securities at the current price. Securities are bought at ASK price and sold at BID price. The advantage of market order is that the order is guaranteed to be filled. So if a trader needs to get into or out of the market immediately, this is the most reliable way. However, there is always slippage, which means the order is probably filled at a less favorable price.
A pending order, will buy or sell securities at a pre-defined price. On MT4 there 4 types of pending orders:
1. Buy Limit
When the ASK price drops to a certain level, enter a buy order. This type of order is placed in anticipation of the price will drop to a bottom and rise again.
2. Buy Stop
When the ASK price rises to a certain level, enter a buy order. This type of order is placed in anticipation of the price will keep going up, and the trader needs to confirm the trend by checking if it really rises to a certain price first.
3. Sell Limit
When the BID price rises to a certain level, enter a sell order. This type of order is placed in anticipation of the price will rise to a top and drop again.
4. Sell Stop
When the BID price drops to a certain level, enter a sell order. This type of order is placed in anticipation of the price will keep dropping down, and the trader needs to confirm the trend by checking if it really drops to a certain price first.
With pending order, a trader can specify Stop Loss and Take Profit.
1. Stop loss
If the actual market goes against the anticipation, close it when the price reaches a certain level. e.g. If the price keeps dropping down after you have entered a Buy order, then close the order if the price drops to an unbearable level, to avoid losing even more.
2. Take profit
If the actual market goes well, close it when the price reaches a certain level, to lock in the profit. e.g. If the price keeps rising after you have entered a Buy order, then close the order when the price rises to a very good position, so you gain the profit.
On MT4, the pending order's open price (the specified price to enter market) must differ from the current market price by at least 100 pips.
Financial Data for FCMS
http://www.cftc.gov/MarketReports/FinancialDataforFCMs/index.htm