When you buy or sell a stock, your broker asks what kind of order you want. The choice decides two things: the price you get and whether your order fills at all. Here are the main order types and when each one makes sense.
Market orders
A market order buys or sells immediately at the best price currently available. It almost always fills, but you don't control the exact price. For large, heavily traded stocks during normal market hours, the price you get is usually very close to the last quote. For thinly traded stocks, at the market open or during fast-moving news, the price can be noticeably worse than you expected.
Limit orders
A limit order sets the worst price you're willing to accept. A buy limit at $50 will only fill at $50 or lower; a sell limit at $60 will only fill at $60 or higher. You control the price, but there's no guarantee the order fills. If the stock never reaches your limit, nothing happens.
Limit orders are a good default for many investors, especially for smaller stocks, ETFs with wide bid-ask spreads, or any trade outside regular hours.
Stop orders (stop-loss)
A stop order sits inactive until the stock trades at your stop price, then becomes a market order. A common use is a stop-loss: if you own a stock at $100, a sell stop at $90 aims to limit your loss. Be aware that once triggered, it sells at the next available price. If a stock gaps down overnight from $95 to $80, your stop at $90 would likely sell near $80.
Stop-limit orders
A stop-limit order combines the two: when the stop price is hit, it becomes a limit order instead of a market order. This protects you from selling far below your stop, but in a sharp drop the order may not fill at all and you could be left holding the stock.
How long your order lasts
- Day: cancelled automatically if not filled by the end of the trading day.
- Good 'til cancelled (GTC): stays open until it fills or you cancel it, though many brokers expire GTC orders after a set number of days.
- Extended hours: some brokers allow limit orders before the open or after the close, when trading is thinner and prices can swing more.
Putting it into practice
Before placing a trade, check the stock's current quote, daily range and average volume on its StockEngine stock page. If you use stop-losses, decide your exit price before you buy and size the position so a stop-out only costs a small, planned share of your account. Our position size calculator works out how many shares to buy from your entry, stop and risk per trade. New to investing? Start with how to buy stocks.
This article is educational and not investment advice.
StockEngine articles are for education only and are not investment advice. Some links may be affiliate links.