There are only two things an order can do: take the price the market is offering right now, or wait for a price you name. Everything else is a variation on that trade-off between certainty of execution and certainty of price.
The two primitives
| Order | You get | You risk | Use when |
|---|---|---|---|
| Market | Immediate execution, guaranteed | An unknown price — whatever is available | Getting in or out matters more than the price |
| Limit | Your price or better, guaranteed | Never being filled at all | The price matters more than certainty of getting filled |
That table is the whole subject in four lines. A market order says “I will pay whatever it takes.” A limit order says “This price or nothing.” You cannot have both guarantees — no order type in existence gives you certainty of execution and certainty of price.
Stop orders — the one people misunderstand
A stop order is dormant until price touches your trigger level, at which point it becomes a market order. That last part is critical and routinely missed.
- Stop-loss — exits a losing position at a predefined level. Non-negotiable for most traders.
- Stop-entry — enters a position on a breakout, above resistance or below support. Same mechanism, opposite intent.
- Stop-limit — triggers a limit order instead of a market order. Protects you from a terrible fill, at the cost of possibly not being filled at all. In a crash, a stop-limit can leave you holding the position you were trying to escape.
- Trailing stop — follows price by a fixed distance or percentage, locking in gains as the trade moves your way and never moving backwards.
Time-in-force: how long the order lives
| Tag | Meaning |
|---|---|
| DAY | Expires at the end of the session if unfilled |
| GTC | Good-till-cancelled — stays live for days or weeks. Check your broker's expiry cap |
| IOC | Immediate-or-cancel — fill whatever you can right now, cancel the rest |
| FOK | Fill-or-kill — fill the entire order immediately or cancel it completely |
OCO and bracket orders
OCO (one-cancels-other) links two orders so that filling one automatically cancels the other. It is how you place a take-profit above and a stop-loss below simultaneously without risking both firing.
A bracket order bundles all three: your entry, your stop and your target, submitted together. This is the single best habit a developing trader can adopt, for a reason that has nothing to do with mechanics — it forces you to decide where you are wrong before you have money on the line and an opinion to defend.
Which to use, in practice
- 1Entering a planned setup
Limit order at your level. You chose the level in advance precisely so you would not have to chase — honour that decision.
- 2Entering a breakout
Stop-entry above the level, or wait for the candle to close and use a limit on the retest. Chasing with a market order into a fast breakout is where slippage is worst.
- 3Exiting a losing trade
Stop-loss as a market order. Here you want certainty of exit, not certainty of price — this is exactly the situation market orders exist for.
- 4Taking profit
Limit order at your target. You are not in a hurry, so let the price come to you.
- 5Emergency exit
Market order, always. If you genuinely need out, do not haggle over a tick.
Execution conditions that change the maths
- Around news releases, spreads widen dramatically and slippage spikes. A stop placed inches away can be taken out by the spread alone without price ever really trading there.
- At the open and close, volume is heavy but prices are volatile. The first and last few minutes of a session are the hardest to get a clean fill in.
- Overnight and at weekends, your stop cannot protect you at all — the market is shut and reopens wherever it likes. Position size is your only defence against gap risk.
You can size any of this correctly using the position size calculator — it works backwards from the loss you are willing to accept.