#OrderTypes101 Order Types 101
1. Market Order
What it does: Buys or sells immediately at the current best available price.
Best for: Speed. You want to enter or exit a position fast.
Risk: Price may move slightly between placing and execution (called slippage).
Example: You click “Buy” and instantly get the best price sellers are offering.
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2. Limit Order
What it does: Buys or sells at a specific price or better.
Best for: Controlling the price you pay or receive.
Risk: It may not get filled if the market never reaches your price.
Example: You set a buy limit order at $95. If the stock drops to $95 or below, your order executes.
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3. Stop Order (Stop-Loss)
What it does: Becomes a market order once a set stop price is hit.
Best for: Protecting against large losses.
Risk: No control over the execution price after it triggers.
Example: You own a stock at $100. You set a stop-loss at $90. If the price falls to $90, your stock sells at the next available price.
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4. Stop-Limit Order
What it does: Becomes a limit order (not market) when the stop price is triggered.
Best for: Controlling the worst-case price after a stop is hit.
Risk: Might not execute if the market moves quickly past your limit price.
Example: Stop price = $90, limit = $89. If price hits $90, it triggers a limit sell, but won’t sell below $89.
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5. Trailing Stop Order
What it does: Follows the market price by a set amount or percentage. Triggers a market order if the price drops that far from the peak.
Best for: Locking in profits while giving room for gains.
Risk: Like a stop-loss, it can be hit by short-term volatility.