Ticker&TapeOrder types: market, limit, stop and stop-limit
An order is your instruction to the broker. Choosing the right type decides the price you get, whether you get filled at all, and how well you are protected when a trade goes wrong.
The basic order types
- Market order: buy or sell right now at the best available price. You are almost sure to be filled, but you do not control the exact price.
- Limit order: buy at this price or lower, or sell at this price or higher. You control the price, but you may not be filled if the stock never reaches it.
- Stop order (stop-loss): a resting order that turns into a market order once the price touches your stop level. Used mainly to cut a loss automatically.
- Stop-limit order: when the stop price is touched, it becomes a limit order instead of a market order. You control the price, but in a fast drop it may never fill.
How long an order lasts
A day order expires at the close if it is not filled. A good-till-canceled (GTC) order stays active until it fills or you cancel it, often up to a few months depending on the broker. Stop-loss orders are usually entered as GTC so they keep protecting you every day.
Check whether your broker lets orders work in the pre-market and after-hours. Most stops only trigger during the regular session.
Slippage
Slippage is the difference between the price you expected and the price you got. It happens with market and stop orders when the price moves fast or the stock is thin. If your stop is at $46 and the stock gaps down to $43 at the open, your stop fills near $43, not $46. No order type can fully protect you from an overnight gap.
Buying a breakout
A breakout is when a stock moves above its pivot, the buy point of a base (see pivot and buy zone). Many traders use a buy stop-limit: for a $50.10 pivot, a stop at $50.10 and a limit around $51. The order only triggers if the stock actually breaks out, and the limit stops you from chasing it too far.
If you are watching live, a limit order placed slightly above the current ask also works. Avoid plain market orders in the first minutes after the open, when spreads are wide.
Protecting a position
Once you are in, decide where you are wrong and place a stop-loss right away. A plain stop (which becomes a market order) is the most reliable way to get out when the stock is falling; a stop-limit can leave you holding a stock that keeps dropping below your limit. Learn where to put it in stop-losses and how many shares to buy in position sizing.
Which order to use
| Get in or out right now | Market order (liquid stocks, during regular hours) |
|---|---|
| Buy only at a set price or better | Limit order |
| Buy a breakout without chasing | Buy stop-limit: stop at the pivot, limit a little above |
| Cut a loss automatically | Stop order, entered as GTC |
Common mistakes
- Using market orders in thin stocks or in the pre-market and getting a terrible fill.
- Using a stop-limit to protect a position, then watching the price fall right through the limit.
- Entering a trade without a stop-loss and planning to decide later.
- Forgetting that a day order expired and assuming you are still protected.
Key points
- Market orders guarantee a fill, limit orders guarantee a price; you cannot have both.
- A buy stop-limit at the pivot is a common way to buy a breakout without chasing.
- Protect every position with a plain stop order, and remember gaps can skip past it.
Check what you learned
Answer at least 2 of 3 correctly to complete the lesson.
1. Your stop is at $46 and the stock gaps down to $43 at the open. Where are you likely filled?
A stop turns into a market order once triggered. When the price gaps below it, you get the next available price. No order type fully protects you from an overnight gap.
2. A base has a pivot at $50.10. You want to buy only if it breaks out, without chasing it too far. Which order fits?
The stop makes the order trigger only on a real breakout, and the limit keeps you from buying too far above the pivot.
3. Why is a plain stop usually better than a stop-limit for protecting a position?
A stop-limit becomes a limit order, so if the price falls through the limit you stay in. A plain stop is the most reliable way out.
Open the position size calculator → Try it on Ticker&Tape