Trading order types tell your provider how and when to fill a trade. A market order fills now at the best available price, a limit order fills only at your price or better, and a stop order waits until price reaches a level and then fills. Choosing well turns your plan for entry, stop and target into orders your platform can carry out.
Quick answer: what are the main trading order types?
The main trading order types are market orders, which fill immediately at the current price; limit orders, which fill only at a set price or better; and stop orders, which trigger once price reaches a level and then fill at the next available price. Stop-limit, trailing and guaranteed stops are variations of these three.
The three core order types
Every ticket, whether for shares, spread bets or CFDs, is built from three instructions, set out in the US regulator’s guide to market, limit and stop orders.
Market order
A market order says “fill me now”. It will be executed, but at whatever the best available price is at that moment. A buy fills at the ask and a sell at the bid, which is why the gap between them is a cost every time, as our guide to bid, ask and the spread in trading explains. The gap between the price you see and the price you get is called slippage in trading.
Limit order
A limit order says “fill me only at this price or better”. A buy limit sits below the current price and a sell limit sits above it. You control the price, but if the market never reaches your level, nothing happens.
Stop order
A stop order says “once price reaches this level, fill me at the next available price”. A buy stop sits above the current price and a sell stop sits below it. When the stop price is touched, the order becomes a market order, so the stop is a trigger, not a promised price.
Buy stop vs buy limit: why the names confuse people
The names do not say which side of price an order sits on. Remember it this way: a limit waits for a better price, and a stop waits for price to move through a level.
If price is at 100 and you want to buy at 95, that is a buy limit. If you want to buy only if price breaks above 105, that is a buy stop. The same logic flips for selling.
| Order | Sits where | Controls | Main risk |
|---|---|---|---|
| Market | Fills now | Speed | Worse price in fast markets |
| Buy limit | Below price | Price | May never fill |
| Sell limit | Above price | Price | May never fill |
| Buy stop | Above price | Trigger level | Slippage after trigger |
| Sell stop | Below price | Trigger level | Slippage after trigger |
| Stop-limit | Either side | Trigger and worst price | May not fill at all |
Using order types for entries
In our experience, beginners use market orders for everything because it is the easiest button, and pay for it in poorer prices. Match the entry to the setup.
- Market order: when the setup is confirmed now and the spread is normal.
- Limit order: when you want to buy a pullback into a zone or sell a rally into resistance.
- Stop entry: when you only want in if price proves itself by breaking a level.
A breakout trader might place a buy stop above resistance, while a more patient trader waits for the break, then sets a buy limit at the old level. Our guide to the breakout and retest strategy for entries walks through that approach, and how to avoid false breakouts explains why stop entries get caught by failed moves.
Using order types for exits
Every trade needs two exits planned before entry, and each maps to an order type.
Stop loss
A stop loss is a sell stop below a long trade or a buy stop above a short one. FINRA’s investor note on stop orders during volatile markets warns that the fill can be markedly different from the stop price, and that a brief spike can trigger a stop even if price recovers. Placement is covered in our guide on where to place a stop loss with price action.
Take profit
A take-profit order is a limit order: a sell limit above a long trade or a buy limit below a short. It fills at your price or better. Our article on setting profit targets and exit rules covers where to put it.
Most platforms link the two as one-cancels-the-other (OCO): when one fills, the other is cancelled.
Stop-limit, trailing and guaranteed stops
Each of these variations solves one problem by creating another.
- Stop-limit: triggers at the stop price but will only fill at your limit or better. In a fast fall it may not fill at all.
- Trailing stop: a stop that follows price by a set distance in your favour and stays put otherwise. Our trailing stop loss strategy for price action traders explains when it helps.
- Guaranteed stop: offered by many UK spread betting and CFD providers. It closes the trade at your exact level even through a gap, in return for a premium; when and how it is charged varies by provider, so read the terms.
Time in force
Pending orders also need an expiry. “Good for the day” orders cancel at the end of the session, while “good till cancelled” orders stay until they fill or you remove them.
Worked example: the same stop in a quiet and a fast market
Example (hypothetical numbers): you buy an index spread bet at 7,500 for £2 per point, with a sell stop at 7,460 and a take-profit limit at 7,580. Your planned risk is 40 points × £2 = £80, and your target is 80 points × £2 = £160.
In a quiet market, price falls through 7,460, the stop triggers and fills at 7,459. The loss is 41 points, or £82, close to plan.
Now imagine bad news overnight and the market opens at 7,420. The stop triggers at the open and fills around there, so the loss is 80 points, or £160, double the plan. A guaranteed stop would have closed the trade at 7,460 for £80 plus the provider’s premium.
Spread bets and CFDs are leveraged, so a gap on an oversized position can cost far more than you planned and quickly eat into your account. We size every trade from the stop distance, as in how to calculate position size for spread bets and CFDs.
Common mistakes
- Treating a stop loss as a fixed price. A normal stop becomes a market order; gaps and news can fill it well beyond your level.
- Mixing up buy stop and buy limit. Placing one where you meant the other can open a trade instantly or never at all.
- Using market orders around news. Spreads often widen, so fills can be poor.
- Setting stops at the obvious pip. Clusters of stops just beyond round numbers can be run, as our piece on why stop losses get hit in fast spikes shows.
Frequently asked questions
Is a stop loss a market order?
A standard stop loss becomes a market order once its stop price is reached. That is why it can fill at a worse price in a fast market or a gap; only a guaranteed stop fixes the exit level.
What is the difference between a market order and a limit order?
A market order fills straight away at the best available price, so you control speed but not price. A limit order fills only at your price or better, so you control price but it may never fill.
Why didn’t my limit order fill?
Price may not have reached your exact level. Charts usually show the bid, but a buy fills at the ask, so the line can touch your level while the order stays unfilled.
Next steps
Open a demo account and place each order type once: a market buy, a buy limit below price, a buy stop above it, then attach a stop loss and take profit.
Our price action trading course with free starter lessons covers assessing price position and building a rules-based risk model, and the basics section is free.
This article is for education only and is not financial advice. Trading leveraged products such as CFDs and spread bets carries a high risk of losing money.
