Order types
Instructions to buy or sell: market, limit, stop. The order type sets the price or the speed of execution.
Choosing between price and speed
A market order fills at once at the best available price: you are sure to be filled, not of the price. A limit order sets a maximum buying price (or minimum selling price): you are sure of the price, not of being filled. A stop order triggers when the price hits a level; it then becomes a market order (plain stop) or a limit order (stop-limit). It is the tool behind a stop-loss.
Worked example
A stop and an opening gap
- Share bought at €100, stop-loss at €95.
- After a profit warning released overnight, the stock opens at €88.
- The stop triggers and becomes a market order: sold near €88, not €95.
A stop caps the loss during the session, but does not protect against an opening gap.
Common mistakes
- Placing a market order on an illiquid stock or at the open: the price you get can surprise you.
Questions and answers
How long does a limit order stay valid?
Depending on the duration chosen: the session, until a date, or until cancelled (often capped at a year).
Notitia newsroom · education, not investment advice.