Market, Limit, Stop & Stop-Limit Orders

An order is just an instruction to your broker: buy or sell this, in this quantity, under these conditions. The four basic types differ in one trade-off — certainty of getting filled versus certainty of the price you pay. You almost never get both. Understanding which you're giving up is the whole game.

Market vs limit: speed or price, pick one

A market order says "fill me now, at whatever the best available price is." You are guaranteed to trade (in any liquid name), but not at any particular price. The price you actually get is set by the current best offer (if buying) or best bid (if selling), and you cross the bid-ask spread to get there. On a calm large-cap that spread might be a single cent; on a thin small-cap or during a news spike it can gap far from the last price you saw on screen.

A limit order says "fill me, but only at this price or better." Buy at 50.00 or lower; sell at 50.00 or higher. You control the price completely — but you give up certainty. If the market never reaches your limit, you simply don't trade. A limit order can also fill partially if there isn't enough size at your price.

The plain rule: use a market order when being in the trade matters more than the last cent; use a limit order when the price matters more than being certain you trade.

There is a second, quieter difference. When you post a limit order away from the current price, you are providing liquidity — others can trade against you. When you send a market order, you are taking liquidity. On most venues those two roles are billed differently, and over many trades that gap adds up. The next lesson on maker-vs-taker fees covers exactly that.

Stop and stop-limit: orders that wait

A stop order (often a "stop-loss") sits dormant until price touches your stop level, and only then becomes active. A sell-stop below the market is the classic protective exit: if price falls to your line, the stop triggers and sends a market order to get you out. That means it shares the market order's weakness — once triggered, it fills at whatever is available, which in a fast drop can be well below your stop. The trigger price and the fill price are not the same promise.

A stop-limit order fixes the price but reintroduces the other risk: when triggered, it sends a limit order instead of a market order. You won't get filled below your limit — but in a violent move price can blow straight through and leave you unfilled, still holding the position you were trying to exit. That is the trade-off in its rawest form: a protective stop-limit can protect you out of a fill exactly when you most needed one.

• Market — guaranteed fill, uncertain price. For getting in or out fast.
• Limit — guaranteed price (or better), uncertain fill. For patience and cost control.
• Stop — dormant trigger that becomes a market order. Reliable exit, uncertain exit price.
• Stop-limit — dormant trigger that becomes a limit order. Price-protected, but can fail to fill in a gap.

Why the order type lands in your journal

Every order type quietly affects your net result, not just your entry. A market order that crosses a wide spread, a stop that slips on a gap — both show up as a worse fill than the price you "expected," which shrinks your gain or deepens your loss in R terms. That difference between your intended price and your actual fill is slippage, and it is real money.

In FSP, log your intended entry and your actual fill, and record commissions in the fees field on each trade. The app folds fees into your net P&L and your R-multiple, so a strategy that looks fine on paper but bleeds through sloppy order choices shows up honestly in your numbers.

Put it to work in FSP: on your next ten trades, write down the order type you used and whether the fill matched your plan — the journal will show you which choices are costing you.