#OrderTypes101 ๐ Order Types 101: Basic Overview
When you trade, youโre placing an order to buy or sell a security. The type of order you use affects when and how your trade gets executed.
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โ 1. Market Order
What it is: Buy/sell immediately at the best available price.
Use when: Speed > price. You just want to get in or out ASAP.
Pros: Fast execution.
Cons: You might get a worse price due to slippage.
๐ Example: "Buy 100 shares of Apple at market" โ your order fills instantly at the current ask price.
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๐งญ 2. Limit Order
What it is: Sets a specific price you're willing to buy or sell at.
Use when: Price > speed. You want control over the price.
Pros: Avoids overpaying or underselling.
Cons: Might not get filled if the market never hits your price.
๐ Example: "Buy 100 shares of Apple at $180" โ only executes if price drops to $180 or lower.
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โณ 3. Stop Order (Stop-Loss)
What it is: Turns into a market order once a set price (stop price) is hit.
Use when: You want to cut losses or protect profits.
Pros: Automates risk management.
Cons: May sell at a worse price than expected due to slippage.
๐ Example: Own Apple at $200. Set stop at $190 โ if it drops to $190, the system sells at next available market price.
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๐ฏ 4. Stop-Limit Order
What it is: Like a stop order, but adds a limit to avoid selling too low or buying too high.
Use when: You want to protect against slippage and control price.
Pros: Combines protection + price control.
Cons: Might not execute if the market moves quickly past your limit.
๐ Example: Stop at $190, limit at $188 โ if price hits $190, it tries to sell at $188 or better.
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๐ฐ๏ธ 5. Time-in-Force Options
These define how long your order stays active:
Day: Expires at end of trading day.
GTC (Good โTil Canceled): Stays active until executed or canceled.
IOC (Immediate or Cancel): Fills all or part immediately, cancels rest.
FOK (Fill or Kill): Must fill entirely right now or cancel.