#OrderTypes101 To buy or sell any asset (stocks, crypto, etc.), you need to give instructions to your trading platform; this is called an order type. Knowing them allows you to trade intelligently and manage your risks.
Here are the essentials:
* Market Order:
* What it does: Buys or sells immediately at the best price available at that moment.
* When to use it: When speed is your priority, regardless of the exact price.
* The good: It executes almost instantly.
* The bad: The final price may vary slightly (slippage).
* Limit Order:
* What it does: Buys or sells only if the price reaches a specific level or better than the one you set.
* When to use it: When the exact price is your priority and you are willing to wait.
* The good: You have total control over the execution price.
* The bad: No guarantee it will execute if the price doesn't reach your level.
* Stop-Loss Order:
* What it does: Activates a market order to sell if the price falls to a predetermined level.
* When to use it: To limit your losses on an open position.
* The good: Protects your capital automatically.
* The bad: There may be slippage if the market moves very quickly.
* Stop-Limit Order:
* What it does: When the price reaches a level (the stop), it activates a limit order at another price (the limit).
* When to use it: You want the protection of a stop, but with more control over the exit price to avoid heavy slippage.
* The good: Less risk of large slippage than a simple stop-loss.
* The bad: If the price passes your limit very quickly, the order may not execute.
Mastering these orders is crucial for any investor.