How to add new order status in magento admin panel

To add New Status in magento admin panel, you need to write your own custom module , then in your config.xml file write the below code to add new Status

<custom_status translate="label"><label><![CDATA[Custom Status]]></label></custom_status>
<new><!-- order state where you want to assign your custom status e.g:- New, Onhold, Canceld etc-->

It will work upto 1.4.2 , But in Magento 1.5.0 or above there is Special Option to do this. To make own Custom status above magento 1.5 version go to System->Order Statuses. Then Click on Create New Status. After creating new status click on Assign Status to State to assign that status

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