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Order Types

In short

Overview of order types — market, limit, stop, and stop-limit orders

When you buy or sell investments, you choose an order type. Market orders fill immediately at any price. Limit orders wait for your target price. Stop orders trigger automatically to protect from losses. Each has trade-offs between speed and price control.

Order types give investors control over trade execution. Market orders prioritize speed; limit orders prioritize price. Stop orders automate risk management. Choosing the right order type depends on the asset's liquidity, urgency, and your acceptable price range.

Related concepts

  • Market Order — A market order says 'buy this stock right now at whatever price it's selling for.' You get filled immediately but might pay slightly more than you expected, especially for less liquid stocks.
  • Limit Order — A limit order says 'buy this stock, but only if the price drops to $50 or less.' You control the price but risk not getting filled if the stock never hits your target.
  • Stop Order — A stop order is your automatic exit. Set a stop at $45 on a $50 stock — if it falls to $45, your order triggers and sells at market price. It protects you from bigger losses but can fill below $45 in a fast-moving market.
  • Bid-Ask Spread — The bid is what buyers will pay; the ask is what sellers want. If the bid is $99.95 and the ask is $100.05, the spread is $0.10. Every time you trade, you pay this spread as a hidden transaction cost.