📘 OrderTypes101: Understanding the Basics of Market Orders, Limit Orders, and Stop Orders
When trading stocks, crypto, or other assets, understanding different order types is key to managing risk and executing smart trades. Here's a quick breakdown:
🔹 Market Order
Executes immediately at the best available price.
Great for fast execution but offers no price control.
Best used when speed matters more than price.
🔹 Limit Order
You set the maximum price you're willing to pay (buy) or minimum you'll accept (sell).
Trade only executes if the market hits your set price.
Ideal for precise entries and exits—but it may not fill.
🔹 Stop Order (Stop-Loss)
Becomes a market order once a specific price is hit.
Often used to limit losses or protect profits.
Example: If you own a stock at $50, placing a stop at $45 will trigger a sell if the price drops to that level.
Each order type plays a different role in your trading strategy. Use them wisely to balance execution, price control, and risk management.