#OrderTypes101 #WCAT
In financial markets, an order is an instruction to buy or sell a security under specific conditions. There are three essential types:
1. Market Order Executes immediately at the best available price. Guarantees speed and execution but not the exact price resulting in possible "slippage," especially in volatile or low-liquidity environments.
2. Limit Order Sets the maximum purchase price or minimum sale price. Ensures price precision (“or better”) but may not execute if the market doesn't reach the set level.
3. Stop Order Activates when a trigger price is hit. A stop loss becomes a market order to limit losses, while a stop limit becomes a limit order offering control but risking non execution.
Additional specialized orders include:
• Trailing Stop Follows price movements to lock in profits.
• IOC, FOK, AON Define fill rules: immediate or cancel, full execution only, or all or none.
Understanding these empowers traders to balance speed, price control, and risk management in line with their strategy.