Market Order

A buy/sell position that must be executed immediately at the best available price. Used to open new positions or liquidate existing ones.

Limit Order

An order with a specified maximum/minimum price, used to open new positions or liquidate existing positions.

Stop Order

A stop order (stop loss order) is used when price moves above or below a specified stop price. Once the stop price is reached, it becomes a market order. It is used to limit losses/reduce risk or protect profits on open positions.

With a stop order, users do not need to constantly monitor prices because it triggers automatically at the desired level. In highly volatile markets, the executed price may differ from the stop price.

Stop Orders consist of:

Sell Stop Order

An instruction to sell at the best price when the market drops below the stop price. It is always placed below the current market price. Example: a client wants to protect a buy position at 25,050 and places a sell stop at 25,010. When price drops past 25,010, the order is executed as a market order to limit losses or protect the position.

Buy Stop Order

An instruction to buy at the best price used to limit losses on an existing sell position when price rises above the stop price.

Stop Limit Order

A combination of a stop order and a limit order. When the stop price is reached, it becomes a buy/sell limit order within the specified price limit. Effective for opening new positions, but not ideal as a protection tool in illiquid markets.

One Cancel the Others (OCO)

Placing two limit orders; when the first is executed, the second is automatically canceled.