Choosing the right order type is the most basic risk-management decision in trading.
Market order
Executes immediately against the best prices in the book. You are guaranteed the fill, not the price — in thin markets large market orders suffer slippage (each successive unit fills at a worse price).
Limit order
Executes only at your specified price or better. You are guaranteed the price, not the fill — if the market never reaches your level, the order stays open until you cancel it. Limit orders that add liquidity usually pay lower (maker) fees.
Stop orders
A stop order stays dormant until the market touches a trigger price, then converts into a market or limit order. The two classic uses:
- Stop-loss: sell automatically if the price falls below a level, capping your downside.
- Stop-entry: buy automatically when the price breaks above a resistance level.
Which one should I use?
You want…UseTo enter or exit right nowMarketA specific price, willing to waitLimitAutomated protection on an open positionStop-loss