Stop Order: It allows you to buy or sell securities at the best available price given in the market at the moment your order is sent for execution. Investing Stocks.
A market order deals with the execution of the order; the price of the security is secondary to the speed of completing the trade. Stop A stop order will set the minimum price I am willing to sell, or short a stock.
Limit orders may or may not get filled depending on how the market is moving, but if they do get filled it will always be at the chosen price, or better. Which one should you choose?
Related Articles. The stock market works in a similar way. Investing Investing Strategy. It will be filled, but not necessarily at the price expected, called slippage.
It can also mean the maximum price at which I am willing to buy, or cover. Contact Us Chat Email 1. Another important use is that you can take some of the emotion out of your trading.
In these cases, the limit orders are placed into a queue for processing as soon as trading resumes. Once the stop level has been reached, the order is automatically converted to a market or limit order depending on the type of order you specify. Order type Description Market order A market order is the simplest of all order types. In an active market, market orders will always get filled, but not necessarily at the exact price that the trader intended.
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Traders will commonly combine a stop and a limit order to fine-tune what price they get. Click Here to read our fill article on Stop Orders!
If a trade is entered with a sell order, the position will be exited with a buy order. Consider for example a buy stop order. A limit order is visible to the market and instructs your broker to fill your buy or sell order at a specific price or better.