Order Types Explained
An order tells your broker what to buy or sell, at what price, and for how long. Choosing the right type protects you from bad fills and helps you stick to your plan.
The main order types
| Order | What it does | Best for |
|---|---|---|
| Market order | Buys or sells immediately at the best available price | Liquid stocks when speed matters more than price |
| Limit order | Buys only at your price or lower, or sells at your price or higher | Controlling the price you pay or receive |
| Stop-loss (stop) order | Becomes a market order once price touches your stop level | Limiting losses on an open position |
| Stop-limit order | Becomes a limit order once the stop level is touched | Limiting losses without accepting any price |
| Trailing stop | A stop that moves up as price rises, keeping a set distance | Locking in profits while letting a winner run |
Market order
Fast and almost always filled, but you don't control the price. In thinly traded stocks or fast markets, the fill can be noticeably worse than the last price you saw.
Limit order
You set the maximum you'll pay (buy) or the minimum you'll accept (sell). You get your price or better, but the order may never fill if the market doesn't reach it.
Stop-loss order
Sits below the current price on a long position. If price falls to the stop, it turns into a market order and sells. If price gaps through your stop, the fill can be below your stop level.
Stop-limit order
Has two prices: the stop that triggers it and the limit that caps the price. It protects you from a terrible fill, but in a sharp fall it may not fill at all and you stay in the trade.
How long an order lasts
- Day order: cancelled automatically at the end of the trading day if not filled.
- Good-till-cancelled (GTC): stays active until filled or you cancel it. Brokers often set a maximum duration.
- Immediate-or-cancel (IOC): fills whatever it can right away and cancels the rest.
Practical tips
- Use limit orders for illiquid stocks, small caps and pre- or after-hours trading.
- Place your stop-loss as soon as you enter a trade, not later.
- Avoid market orders at the open, when spreads are often widest.
- Double-check quantity and price before submitting. Most order mistakes are typos.
Educational information only, not investment advice. Market data may be delayed.
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