Section 1 · Stock Fundamentals
Types of Orders: Market, Limit & Stop
The three orders every trader must know before placing a single trade.
Three tools, three different jobs.
A market order fills immediately at whatever the current price is — fast but imprecise. A limit order fills only at your specified price or better — precise but may not fill. A stop order triggers a market order once price hits a level — used to cut losses automatically. Knowing which to use and when separates disciplined traders from gamblers.
3 things to know
Market orders guarantee execution but not price — avoid them on illiquid stocks.
Limit orders give you price control but risk missing the trade entirely.
Stop-loss orders are the most important risk management tool a trader has.
Dive Deeper
Market Order
Fills immediately at the best available price. Fast but imprecise — on a thin stock, you may fill $0.50+ away from the quote.
Limit Order
Fills only at your specified price or better. You control the entry cost but risk missing the trade if price moves away.
Stop Order
Triggers a market order when price hits your stop level. Your primary risk management tool — it exits a losing trade automatically.
Key vocabulary — tap each card
Practice
How to use a stop-loss correctly
Enter with a limit order
Place your buy at your planned entry price. Limit orders control slippage at the open.
Set your stop-loss immediately
Before the trade even moves, decide where you are wrong and set your stop there.
Size based on stop distance
Position size = (Max $ risk) ÷ (Entry − Stop). Never risk more than your plan allows.
Let the stop work
If your stop level hits, the order triggers automatically. No emotion. No hesitation.
Trail as the trade works
As price rises, move your stop up to lock in gains. Never move it further away from entry.
Did you know?
On May 6, 2010 — the 'Flash Crash' — market orders sent during the chaos filled at pennies. Stocks worth $40 executed at $0.01. Market orders on volatile stocks are dangerous.