Orders and execution
Market, limit and stop orders without the false sense of certainty.
12 min readCoreKnowledge check
An order is an instruction with trade-offs. Some instructions prioritise execution; others prioritise price. None can guarantee both under all conditions.
Core concepts
Market orders
A market order prioritises execution at the best prices currently available. It does not guarantee the price shown when you press the button, especially in fast or thin markets.
Limit orders
A limit order sets the worst price you will accept. It controls price but may not fill. Queue position matters when many orders share the same limit.
Stop orders
A stop is activated when a trigger is reached, then commonly becomes a market order. Gaps can produce execution far from the stop level. A stop-limit adds price control but can remain unfilled.
The lesson in three lines.
- 1Market orders prioritise execution, not price.
- 2Limit orders prioritise price, not execution.
- 3A stop level is not necessarily the fill price.
KNOWLEDGE CHECK01 / 01