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Key Takeaways
- Market Order: Execute immediately at current price.
- Limit Order: Execute only at your specified price or better.
- Stop Order: Trigger when price reaches a specified level.
- Stop-Loss: Close position to limit losses.
- Take-Profit: Close position to lock in profits.
Table of Contents
Market Orders
A market order is an instruction to buy or sell immediately at the best available current price. It's the simplest order type—click buy/sell and you're in the trade.
- Pros: Immediate execution, guaranteed fill
- Cons: May slip in fast markets, no price guarantee
- Best For: When you need to enter/exit NOW
Pending Orders
Pending orders wait for price to reach a specified level before executing:
| Order Type | Trigger | Use Case |
|---|---|---|
| Buy Limit | Below current price | Buy at lower price (pullback) |
| Sell Limit | Above current price | Sell at higher price (rally) |
| Buy Stop | Above current price | Buy on breakout higher |
| Sell Stop | Below current price | Sell on breakout lower |
Stop vs Limit
- Limit: Execute only at your price or BETTER. May not fill if price doesn't reach.
- Stop: Becomes market order when price reaches trigger. Guarantees fill, not price.
- Stop-Limit: Becomes limit order when triggered. Controls slippage but may not fill.
Stop-Loss & Take-Profit
These are the most important orders for risk management:
| Order | Purpose | Execution |
|---|---|---|
| Stop-Loss (SL) | Limit maximum loss | Closes position at specified loss level |
| Take-Profit (TP) | Lock in profits | Closes position at specified profit level |
| Trailing Stop | Follow profitable trades | Moves SL up as price rises (for buys) |
Advanced Order Types
- OCO (One-Cancels-Other): Two orders where filling one cancels the other.
- GTC (Good Till Cancelled): Stays active until you cancel or it fills.
- GTD (Good Till Date): Expires at a specified date/time.
- Fill or Kill: Execute entire order immediately or cancel completely.
Frequently Asked Questions
What is a market order?
An order to buy or sell immediately at the current best available price.
What is a limit order?
An order to buy/sell only at a specified price or better. May not fill if price doesn't reach.
What is a stop order?
An order that triggers when price reaches a specified level, then executes as market order.
What is the difference between stop and limit?
Stop guarantees execution but not price. Limit guarantees price but not execution.
What is a buy stop order?
An order to buy when price rises to a specified level. Used for breakout trading.
What is a sell limit order?
An order to sell when price rises to a specified level above current price.
What is a trailing stop?
A stop-loss that automatically follows price at a set distance, locking in profits.
Can pending orders expire?
Yes. You can set expiration time (GTD) or leave them active until cancelled (GTC).
What is OCO order?
One-Cancels-Other. Two linked orders where filling one automatically cancels the other.
Do pending orders work when I'm offline?
Yes. They're stored on the broker's server and execute when price reaches your level.
What is slippage on stop orders?
Difference between your stop price and actual fill price, common in fast markets or gaps.
Which order type is best for beginners?
Market orders are simplest. Learn to use stop-loss immediately for risk management.
