Order Types: Market, Limit and Stop

Two people buying the same stock at the same moment can end up with different prices, just by using different order types. The order type is the rule that decides when and at what price your trade happens.

The Market Order

It fills instantly, starting from the best opposing price in the book. Its advantage is certainty: it executes. Its disadvantage lives in the same place: you don't know at what price.

In a liquid stock the difference is trivial. In an illiquid stock, or in the first seconds after the open, a market order can chew through several levels of the book and fill at a much worse average than you expected. That is called slippage.

The Limit Order

You set a ceiling (when buying) or a floor (when selling). If the price never gets there, the order waits — and expires at day's end or whenever you set it to.

A practical rule for beginners: unless you have a specific reason not to, use a limit order.

The Stop Order

A stop is a trigger. The moment the price touches your level, the order activates and becomes a market order.

• Stop-loss: sells your position if the price falls below a set level. It exists to cap the loss.
• Stop-limit: on trigger, sends a limit order instead of a market order. It avoids selling at a bad price — at the risk of not selling at all.
• Trailing stop: the level rides up with the price but never moves down. Used to protect gains.

Time-in-Force

Forgetting an open GTC order is a classic mistake: a buy order placed months ago can quietly execute long after your view of the company has completely changed.

Where You'll See It on This Site

Açılış Zili is not a broker; no orders are placed here and no order book is shown on these screens. The point of this piece is that you can read the screen at your own broker.