Market, limit and stop-limit orders

A market order is executed immediately at the best available prices in the order book.

• Pro: fast and almost always filled.
• Con: the final price is not known in advance. In a thin market, a large market order can be filled at worse prices than expected — this difference is called slippage.

A limit order sets the worst price you accept: a buy limit order is filled only at or below your price, a sell limit order only at or above it. If the market does not reach your price, the order waits in the book.

• Pro: control over the price.
• Con: it may never be filled.

A stop-limit order has two prices:

1. Stop price — when the market reaches it, the order is activated.
2. Limit price — the activated order becomes a limit order at this price.

Stop-limit orders are used, for example, to limit a loss or to buy only after the price breaks above a level. If the price moves very quickly past the limit price, the order may stay unfilled.

Many exchanges let you choose how long an order lives: until cancelled (GTC), immediately or cancel (IOC), or fill or kill (FOK).