#OrderTypes101

Understanding Market, Limit, and Stop Orders

In trading, choosing the right order type can greatly impact your results.

Market orders are executed instantly at the current market price, making them ideal for quick entries or exits. However, in fast-moving markets, this speed can lead to slippage—buying or selling at a slightly worse price than expected.

Limit orders give you more control. You set the maximum price you're willing to pay (buy) or the minimum you’ll accept (sell). This precision protects you from unfavorable prices but carries the risk that your order may not be filled if the market doesn’t hit your target.

Stop orders—often called stop-loss orders—help manage risk. Once an asset reaches a specific trigger price, the stop order turns into a market order to sell (or buy), aiming to limit losses or protect gains in volatile conditions.

Understanding these order types can help traders make smarter, more strategic decisions in any market environment.