Order types: your instructions to the market

9 min 55 XP

Three ways to enter

Where each pending order lives relative to current price

Market order, 'fill me NOW at the best available price.' Instant, guaranteed execution, but you pay the spread and accept slippage. Use when being in the trade *right now* matters more than the exact price.

Limit order, 'fill me at this price *or better*.' A buy limit sits *below* current price (you wait for a dip into your level); a sell limit sits *above* (you sell into a rally). Limits are the patient trader's tool: price comes to you, you never chase, and you often enter at the best price of the move, but the market may never come, and you miss the trade. That trade-off is *normal*.

Stop order, 'fill me once price *passes* this level.' A buy stop sits *above* current price (enter only if the market proves strength, e.g. a breakout); a sell stop sits *below*. Stops trade confirmation for price: you enter later and worse, but only when the move has actually started.

The two orders that protect every trade

Stop-loss (SL)

The exit if you are WRONG, closes the trade at your maximum accepted loss.
Placed where your trade idea is *invalidated*, not at a random distance.
Non-negotiable. A trade without a stop is a gamble with unbounded loss.

Take-profit (TP)

The exit if you are RIGHT, locks in the target automatically.
Placed at a logical objective (a level, a measured move).
Lets winners complete without emotions cutting them short.

Market = immediacy · Limit = price (or better) · Stop = confirmation.
Buy limit BELOW price, buy stop ABOVE price, examiners (and live accounts) love this distinction.
Every entry you ever place should carry an SL and a TP at moments you decided in advance, with a calm mind.
Missing a trade because your limit was never hit costs nothing. Chasing one with a market order in panic costs plenty.

Now place them yourself

In the Orders Lab below, read each goal, choose the right order type, then run the market and watch where it fills. Where an order sits relative to price is the whole game.

Orders Lab · 1/3

Your goal

You want to BUY, but only if price first dips to a cheaper level.

Which order type does the job?

Praxis.

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Level 1: Foundations

Module 3: The Trader's Language · Lesson 15/40