Module 1 — Foundations
Market, limit and stop orders
6 minute read
In plain English
A market order fills immediately at whatever price is available. A limit order fills only at your price or better. A stop order becomes an order once a price is reached.
Why it matters
Choosing the wrong order type is one of the most common ways beginners lose money on a good idea.
Example
In a fast-moving stock, a market order placed at $3.00 can fill at $3.18. A limit order at $3.02 either fills there or not at all.
Try this
In your broker's paper account, place the same trade three times using each order type and compare the fills.
Common mistake
Using market orders in thin, fast markets.
What this does not mean
A stop order is not a guarantee. In a gap it can fill far below your stop price.
Educational content only. Not financial advice.