#OrderTypes101 Here’s a concise yet comprehensive breakdown of common order types in trading, perfect for #OrderTypes101:
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### **1. Market Order**
- **What it does**: Executes immediately at the best available current market price.
- **Pros**: Guaranteed execution (but not price). Ideal for high-liquidity stocks or urgent trades .
- **Cons**: Risk of slippage (unexpected price changes) in volatile or illiquid markets .
### **2. Limit Order**
- **What it does**: Buys/sells only at a specified price or better (e.g., buy ≤ $10 or sell ≥ $15).
- **Pros**: Price control; avoids unfavorable fills .
- **Cons**: No execution guarantee if the price isn’t met .
- **Variants**:
- *Good-Til-Canceled (GTC)*: Active for up to 180 days unless filled .
- *Day Order*: Expires if unfilled by market close .
### **3. Stop Order (Stop-Loss)**
- **What it does**: Triggers a market order once a stop price is hit (e.g., sell if stock drops to $50).
- **Use case**: Limits losses or locks in profits .
- **Risk**: No price guarantee after triggering; gaps can lead to worse fills .
### **4. Stop-Limit Order**
- **What it does**: Combines stop and limit orders. After the stop price is hit, it becomes a limit order (e.g., sell at $50 but no lower than $48).
- **Pros**: Price protection post-trigger .
- **Cons**: Risk of no execution if the limit isn’t met .
### **5. Trailing Stop Order**
- **What it does**: Adjusts the stop price dynamically (e.g., trailing by 5% below the peak price).
- **Use case**: Protects gains in trending markets .
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### **Key Considerations**
- **Time-in-Force**: Choose between day, GTC, or extended-hours options .
- **Liquidity Matters**: Market orders work best in liquid markets; limit orders suit volatile stocks .
- **Advanced Types**: Some platforms offer *bracket orders* (OCO), *market-on-close*, or *blast-all* for complex strategies .
For visual learners, [Schwab’s examples](https://www.schwab.com/learn/story/3-order-types-market-limit-and-stop-orders) and [Fidelity’s guidelines]
