Order Types Explained
Before risking real capital, you need to understand the different ways to enter and exit positions.
Market Orders
A market order executes immediately at the best available price. Fast, but you accept whatever price the market gives you.
When to use: Urgent entries/exits where speed matters more than price precision.
Risk: Slippage — in thin or volatile markets, your fill price can differ significantly from what you see on screen.
Limit Orders
A limit order sets the maximum price you'll pay (for buys) or minimum price you'll accept (for sells). It only fills at your price or better.
When to use: When you have a specific entry zone and are willing to wait. Perfect for supply/demand zone entries.
Risk: Your order may never fill if price doesn't reach your level.
Stop Orders (Stop-Market)
A stop order becomes a market order once the stop price is hit.
- Buy stop: Placed above current price. Triggers if price moves up (breakout entries).
- Sell stop: Placed below current price. Used as a stop loss to exit losing positions.
Stop-Limit Orders
A hybrid: once the stop price triggers, it places a limit order instead of a market order. Gives price control, but risks no fill during fast moves.
Trailing Stop
A stop loss that follows price by a fixed amount or percentage. Locks in profit as price moves in your favor.
| Scenario | Best Order Type | |----------|----------------| | Quick exit on a crash | Market | | Entering at a demand zone | Limit | | Breakout entry above resistance | Buy Stop | | Protecting profits in a trend | Trailing Stop |
Key Takeaway
Master your order types before you master your strategy. The wrong order at the right time can still cost you.