INVESTING MECHANICS
Telling your broker what you want, and how
Once you've picked what to buy, you still need to tell your broker how to buy it — how fast, at what price, under what conditions. That's what an order type is.
The three order types
Market order
A market order says “buy or sell right now, at whatever the current price is.” It fills almost immediately, but you don't control the exact price you get — especially if the price is moving fast, but its usually very close to the asking price.
Market order
In a fast-moving or thinly traded stock, the price you actually pay can be a little different from the price you saw a second before you clicked — this gap is sometimes called slippage. For large, heavily traded ETFs and stocks, that gap is usually small. It matters more with low-volume or volatile names.
Limit order
A limit order says “only buy or sell at this price or better.” You control the price, but there's no guarantee it fills — if the market never reaches your price, the order just sits there until it does, expires, or you cancel it.
Limit Order
A limit order says “only buy or sell at this price or better.” You control the price, but there's no guarantee it fills — if the market never reaches your price, the order just sits there until it does, expires, or you cancel it.
Stop Order
A stop order sits inactive until the price reaches a level you set, then it triggers and becomes a market order. It's often used to try to limit a loss or protect a gain if a price moves against you.
Stop order
Once triggered, a plain stop order behaves like a market order — it fills at the next available price, not necessarily your stop price, which matters in a fast drop. A stop-limit order adds a second price, combining the trigger of a stop with the price control of a limit — at the cost of the same no-guaranteed-fill trade-off a limit order has.
Why it's easy to miss
A limit order guarantees price, not that it fills. A stop order guarantees a trigger, not the price you get once it does. Neither type guarantees both — that's the actual tradeoff between them, not a flaw in one versus the other.
What this looks like on an order ticket
Every broker's screen looks a little different, but the fields are almost always the same.
Select Account
Buy
SELL
Symbol
VTI
10
Limit
Quantity
Order Type
Limit Price
$248.50
Only fills at this price or better. Shown because order type is limit — a market order skips this field, a stop order shows a trigger price instead.
Order Good Till
Day
Trade Password
Review Order
Once you know what kind of order you're placing, the next question is when and how to actually enter and exit a position — which is where things like partial fills and timing come in.