Trading Fundamentals
Learn how market, limit, stop, stop-loss, and take-profit orders work, and how execution may vary under different market conditions.
An order is an instruction sent through your trading platform to buy, sell, open, close, or modify a position. Understanding order types can help participants manage entries, exits, and risk parameters in advance, even when they are not actively monitoring the platform.
A market order is an instruction to buy or sell at the best available price when the order is executed. It prioritises execution over price certainty. In fast-moving or low-liquidity markets, the executed price may differ from the price displayed when the order was placed. This difference is known as slippage.
A limit order is an instruction to buy or sell at a specified price or better. It can provide price control, but execution is not guaranteed. If the market does not reach the specified price, the order may remain pending or expire depending on the order settings.
A stop order becomes active once the market reaches a specified stop price and may then execute as a market order. Buy stops are commonly placed above the current market price, while sell stops are commonly placed below it. Stop orders may be used for trade entry or as part of an exit plan.
A stop-loss order is designed to close an existing position once the market reaches a specified price level. It can help define an exit level in advance, but it does not guarantee execution at the exact stop price. Slippage may occur during fast-moving or low-liquidity market conditions.
A take-profit order is designed to close a position once the market reaches a specified target price. When used with a stop-loss order, it can help define planned exit levels in advance. These orders can support trade management, but they do not guarantee the outcome of a trade.
Active orders are submitted for execution immediately, while pending orders, such as limit and stop orders, remain in place until specified conditions are met, cancelled, or expired. Pending orders may usually be modified or cancelled before they are triggered, depending on platform settings and market conditions.
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