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The instruction that tells your broker how to handle a trade - for example, fill it instantly or only at a set price.
Why It Matters
The order type is the single most important choice you make when placing a trade, because it sets the tradeoff between speed and price. A market order says 'fill me now at whatever the price is.' A limit order says 'only fill me at my price or better.' Stop orders add a trigger. Picking the right one for the situation is the difference between getting the price you expected and being surprised - especially on volatile or thinly-traded stocks.
Key Points
- Tells the system how to handle your trade
- Main tradeoff: speed (market) vs price control (limit)
- Stop and trailing orders add a trigger price
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How Stock Orders Work
Get a complete explanation with examples, key takeaways, and a quiz to test your knowledge.
Related Terms
Common Questions
The instruction that tells your broker how to handle a trade - for example, fill it instantly or only at a set price. The order type is the single most important choice you make when placing a trade, because it sets the tradeoff between speed and price. A market order says 'fill me now at whatever the price is.
The order type is the single most important choice you make when placing a trade, because it sets the tradeoff between speed and price. A market order says 'fill me now at whatever the price is.' A limit order says 'only fill me at my price or better.' Stop orders add a trigger. Picking the right one for the situation is the difference between getting the price you expected and being surprised - especially on volatile or thinly-traded stocks.
Tells the system how to handle your trade
Main tradeoff: speed (market) vs price control (limit)
Stop and trailing orders add a trigger price