#OrderTypes101

Order Types: The Essence

Market Order:

What does it do? Buys or sells immediately at the best available price in the market. Ideal for: Speed. Beware of: The exact price (there may be slippage).

Limit Order:

What does it do? Buys or sells only at a specific price (or better) that you set. Ideal for: Controlling the price. Beware of: Execution (it may not fill if the price is not reached).

Stop-Loss Order:

What does it do? Activates when the price reaches a predefined level (stop price), and then converts to a market order to limit your losses. Ideal for: Managing risk (protects your capital). Beware of: The execution price (there may be slippage after activation).

Stop-Limit Order:

What does it do? Activates when the price reaches your stop price, but then converts to a limit order (with a limit price that you set). Ideal for: Limiting losses with price control. Beware of: Execution (it might not fill if the market moves too quickly).

Trailing Stop Order:

What does it do? A stop-loss that automatically adjusts if the price moves in your favor, "trailing" the profit to protect it. Ideal for: Securing profits while allowing the trade to run. Beware of: Like the normal stop, the execution price is not guaranteed.

In summary:

Market: Speed, no price guarantee. Limit: Guaranteed price, no speed guarantee. Stop / Stop-Limit / Trailing Stop: To manage risk and protect profits.