Here is a simplified breakdown of the most common types of orders in the markets:

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📌 1. Market Order

Description: Buy or sell immediately at the current market price.

Usage: When you want to execute the trade quickly without waiting for a specific price.

Risk: You may get a worse price than expected due to rapid market changes.

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📌 2. Limit Order

Description: Buy or sell at a specific price or better.

Usage: You use it when you want to control the price at which the trade is executed.

Advantage: Protects you from paying more than you want or selling for less than you want.

Disadvantage: The order may not be executed if the price does not reach the desired limit.

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📌 3. Stop Order

Description: Converts to a market order when a specific price is reached.

Usage: To minimize losses or protect profits.

Example: If you bought a stock at a price of 100, you can place a sell stop order at 95.

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📌 4. Stop-Limit Order

Description: A combination of a stop order and a limit order.

Usage: When the stop price is reached, a limit order at a specific price is activated.

Advantage: Gives you additional control.

Disadvantage: Like the limit order, it may not be executed if there is no price match.

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📌 5. Trailing Stop Order

Description: A stop order that automatically moves with price movements in your favor.

Usage: To secure profits while allowing a continued positive trend.