The order types, side by side
Market order
- What it says
- Buy or sell now, at the best price available
- When it acts
- At once
- Is the price certain?
- No
- Is a fill certain?
- Yes, in a working market
- If the price gaps past it
- Fills at the next price available
- Commonly used for
- Getting in or out without waiting
Limit order
- What it says
- Buy at this price or lower; sell at this price or higher
- When it acts
- When the price reaches the limit
- Is the price certain?
- Yes: the limit or better
- Is a fill certain?
- No
- If the price gaps past it
- Fills at the limit or better, by the venue’s rules
- Commonly used for
- Entering at a chosen price, or taking a profit
Stop order
- What it says
- If the price reaches this level, trade at the market
- When it acts
- When the price reaches the stop
- Is the price certain?
- No
- Is a fill certain?
- Yes, once triggered
- If the price gaps past it
- Fills at the next price available, which may be far from the stop
- Commonly used for
- Limiting a loss, or entering on a break of a level
Stop-limit order
- What it says
- If the price reaches this level, place a limit order
- When it acts
- When the price reaches the stop
- Is the price certain?
- Yes: the limit or better
- Is a fill certain?
- No
- If the price gaps past it
- May not fill at all
- Commonly used for
- A stop with a cap on how poor the price may be
Trailing stop
- What it says
- Keep a stop a set distance behind the best price reached
- When it acts
- When the price falls back by the set distance
- Is the price certain?
- No
- Is a fill certain?
- Yes, once triggered
- If the price gaps past it
- Fills at the next price available, which may be far from the stop
- Commonly used for
- A stop that follows a position as it gains
How to read this table
Read down a column to see one order type whole, or across a row to see how the five differ on one question. The two rows in the middle are the heart of it: no order type answers yes to both. Names and details vary between platforms and venues, for example whether a stop is triggered by the bid or the ask price, so the rules of the place where an order is sent are the ones that count.
Each one, in a paragraph
Market order
A market order asks for a trade now and accepts whatever price is there. It is the surest way to get a fill and the least sure about the price: in a quiet market the two are close, and in a fast or thin one the fill can be some way from the price last seen. That difference is called slippage.
Limit order
A limit order names the worst price it will accept. A limit to buy sits below the current price and a limit to sell above it. It never fills at a worse price than the one named, and the cost of that promise is that it may never fill at all: the price can turn just short of it, or touch it without enough on the other side to complete the order.
Stop order
A stop order waits until the price reaches its level and then becomes a market order. A stop to sell sits below the current price and a stop to buy above it. The level is a trigger, not a price: in an orderly market the fill is close to it, and after a gap the fill is wherever trading resumes. A stop used to close a losing position is called a stop-loss.
Stop-limit order
A stop-limit order has two prices. Reaching the first, the stop, places a limit order at the second. It protects against a very poor fill, and for that reason it can fail at the moment it is needed: if the price jumps beyond the limit, the order rests unfilled while the position stays open and the price moves on.
Trailing stop
A trailing stop is a stop order whose level moves. For a position that gains as the price rises, the stop follows the price up at a fixed distance and stays where it is when the price falls. It is triggered when the price comes back by that distance from its best point. Once triggered it behaves like any stop: a market order, with no promise about the price. On many platforms a trailing stop is run by the trader’s own software and works only while that software is running.
Show me two side by side
Choose any two. The rows on which they give different answers are marked; the rest are the same for both.
Market order and Limit order differ on 6 of 6 rows.
- What it saysDiffers
Market orderBuy or sell now, at the best price available
Limit orderBuy at this price or lower; sell at this price or higher
- When it actsDiffers
Market orderAt once
Limit orderWhen the price reaches the limit
- Is the price certain?Differs
Market orderNo
Limit orderYes: the limit or better
- Is a fill certain?Differs
Market orderYes, in a working market
Limit orderNo
- If the price gaps past itDiffers
Market orderFills at the next price available
Limit orderFills at the limit or better, by the venue’s rules
- Commonly used forDiffers
Market orderGetting in or out without waiting
Limit orderEntering at a chosen price, or taking a profit
One invented path, five sell orders
A drawing of the mechanism. Choose one of the order types beneath it and the sentence says what the drawing shows.
The market order sells at once, at the price on the screen when it is sent, before the path has gone anywhere.
An invented price path with a gap in it, drawn to show where each kind of order would fill. Not market data, and real fills depend on the venue.
Questions people ask
- What is the difference between a stop order and a limit order?
- A limit order names the worst price it will accept and may never fill. A stop order names a trigger: when the price reaches it the order becomes a market order, which fills at whatever price is available. A limit is certain about price and uncertain about a fill; a stop is the reverse.
- Does a stop-loss guarantee the price I get out at?
- No. An ordinary stop-loss becomes a market order when its level is reached, and it fills at the next price available. If the price gaps past the level, for instance over a weekend or on news, the fill can be well beyond it. Some providers sell a guaranteed stop for a fee; that is a separate product with its own terms.
- Why would a stop-limit order not fill?
- Because its second price is a limit. If the price jumps past both the stop and the limit, the limit order that is placed cannot be filled at its price or better, so it waits. If the price does not return, it never fills and the position remains open.
The words on this page
A general explanation for study. It is not advice or a recommendation, it does not say which of these to use, and it does not describe the terms of any account. What GIO4X itself offers is set out on Trading conditions, not here.