An order is an instruction to your broker. Choosing the right type decides whether you get filled, at what price, and whether your trade is protected while you're away from the screen.
Market orders
A market order fills immediately at the best price available: you buy at the ask or sell at the bid. You are guaranteed a fill, but not a price. In a fast market the fill can be a little different from the price you saw when you clicked.
Pending orders: limit and stop
Pending orders wait until price reaches a level you choose. There are two families, and the difference is simple once you see it:
- A limit order fills at your price or better. You use it to buy cheaper or sell higher than now.
- A stop order triggers a market order once price trades through your level. You use it to join a breakout or to exit a losing trade.
Protecting a trade: stop-loss and take-profit
A stop-loss is simply a stop order that closes your position if price moves against you. A take-profit is a limit order that closes it at your target. Most platforms let you attach both when you open the trade, so the plan is in place before you're emotionally involved.
A trailing stop moves your stop-loss behind price as the trade goes your way, locking in profit, but never moves back.
Combined and conditional orders
- OCO (one cancels the other): two orders linked so that when one fills, the other is cancelled. Useful for trading a breakout in either direction.
- Bracket order: an entry with a stop-loss and take-profit attached as an OCO pair.
- Stop-limit: once the stop level is hit, a limit order is placed instead of a market order. You avoid a bad fill, but you might not get filled at all.
| Order | Fills when | Use it to | Risk |
|---|---|---|---|
| Market | Immediately | Get in or out now | Price may differ slightly |
| Buy limit | Price falls to your level | Buy a pullback | Price never comes back |
| Sell limit | Price rises to your level | Sell a rally | Price never comes back |
| Buy stop | Price rises through your level | Buy a breakout | False breakouts |
| Sell stop | Price falls through your level | Sell a breakdown or exit a long | Slippage in fast moves |
| Stop-limit | Triggered, then fills at limit or better | Control the fill price | May not fill |
Slippage and gaps
A stop order becomes a market order once triggered. If price jumps past your level, as it can at the weekend open or on a big news release, you are filled at the next available price. That difference is slippage.
How long an order lasts
Pending orders also have a time-in-force: GTC (good till cancelled) stays until you remove it; Day expires at the end of the session. Some platforms also offer immediate-or-cancel and fill-or-kill for larger orders.
Key takeaways
- Market orders guarantee a fill but not a price; pending orders wait for your level.
- Limits fill at your price or better (buy low, sell high); stops trigger when price moves through your level.
- A stop-loss is a stop order and a take-profit is a limit order; attach both when you enter.
- Stops can slip past your level in gaps and fast markets, so size positions with that in mind.