Order types: market, limit, stop

How to enter and exit, and what gaps and slippage do to your orders. · about 5 min

…

General education only. Not financial, tax or legal advice.

The basic orders

• Market – buy or sell now at the best available price. Fast, but you accept the price you get.
• Limit – only trade at your price or better. A buy limit sits below the current price; a sell limit above. It might never fill.
• Stop – becomes a market order once price reaches your trigger. A sell stop sits below the price (to exit a loser or enter a breakdown); a buy stop sits above.

Stop-loss and take-profit

A stop-loss exits a position if it moves against you by a set amount; a take-profit exits when it reaches your target. Setting both when you enter is how you define risk and reward before emotion shows up.

Gaps and slippage

Prices can jump (for example overnight or on news). A stop does not guarantee your price: it triggers, then fills at the next available price, which can be worse. Our desk fills triggers at the price it sees, and only while the page is open.

Key points

• Limit orders control price; market orders control speed.
• Stops turn into market orders when triggered.
• Gaps can fill a stop well beyond your trigger price.

Checklist

Tick these off as you practise (saved in this browser).

• I placed a limit order and watched it stay pending
• I set a stop-loss and take-profit on a paper trade
• I understand a stop is not a price guarantee

Quick quiz

Pass mark: 2 out of 3. You can retry as often as you like.

1. A buy limit order is placed:

Above the current price Below the current price At any price

2. A sell stop-loss on a long position sits:

Below the current price Above the current price Exactly at the current price

3. If price gaps through your stop, you will typically be filled:

Exactly at the stop At the next available price, possibly worse Never

Check answers