Order Types
Understanding different order types for effective trading.
Basic Order Types
Market Order
Executes immediately at best available price.
How it works: Submit order → Matches instantly → Fills at current price
Example:
BTC showing: $50,000
Market buy 0.1 BTC
Fills at: $50,015 (slippage)
Cost: $5,001.50Guaranteed execution
No price control
Immediate entry/exit
Slippage in fast markets
Simple
Costs bid-ask spread
Use when: Need immediate execution, high liquidity, urgent trade Avoid when: Want specific price, low liquidity, large position
Limit Order
Executes only at your specified price or better.
How it works: Set price → Waits on order book → Fills when price reached (or never)
Example:
BTC at: $50,000
Limit buy at: $49,500
Waits...
If price drops to $49,500 → Fills
If price rises → Never fillsPrice control
May never fill
No slippage beyond limit
Might miss move
Better fills possible
Requires monitoring
Use when: Want specific price, not urgent, buying dips/selling rallies Avoid when: Need guaranteed execution, fast-moving market
Advanced Order Types
Stop Loss Order
Automatically closes position when price moves against you.
How it works: Set trigger price → Price hits trigger → Converts to market order → Closes position
Example:
Buy BTC at: $50,000
Stop loss at: $49,000 (2% loss)
Price falls to $49,000
Stop triggers → Closes ~$48,950-$49,000
Loss limited to ~2%Stop loss types:
Fixed %
Set % below entry
Always 2% below entry
Technical
Below support/pattern
Below recent swing low
Trailing
Moves up with price
Always 3% below highest reached
When to use: Every trade (always), volatile markets, can't monitor Best practices: Place below support, account for volatility, never remove hoping for recovery
Take Profit Order
Automatically closes position when profit target reached.
How it works: Set target → Price reaches target → Converts to market → Locks profit
Example:
Buy BTC at: $50,000
Take profit at: $52,000 (4% gain)
Price rises to $52,000
Closes ~$51,950-$52,000
Profit locked at ~4%Strategies:
Use with stop loss for complete automation
Scale out (multiple targets at different levels)
Based on support/resistance
Risk-reward ratios (2:1, 3:1)
Stop Limit Order
Combination of stop and limit orders.
How it works: Stop price triggers → Converts to limit order (not market) → Fills only at limit or better
Example:
BTC at: $50,000
Stop: $49,000
Limit: $48,800
Price falls to $49,000 → Triggers
Becomes limit sell at $48,800
Only executes if can get $48,800+Price protection on stops
Might not fill in fast market
No terrible slippage fills
Could lose more if gaps
Use when: Want price protection, liquid markets, experienced Avoid when: Need guaranteed stop, volatile markets, beginners
Order Duration
GTC (Good-Til-Canceled)
Stays until filled/canceled
Limit orders, long-term targets, no urgency
IOC (Immediate-or-Cancel)
Fills immediately or cancels
Avoid partial fills
FOK (Fill-or-Kill)
All or nothing, instant
Large orders, no partials
Day Order
Cancels end of trading day
Short-term trades
Order Strategy by Scenario
Entering Position
Need immediate entry
Market
Guaranteed execution
Want specific price
Limit
Price control
Volatile market
Limit with wider range
Balance speed + control
Protecting Position
Always
Stop Loss
Limit downside
Clear target
Take Profit
Lock gains
Let winners run
Trailing Stop
Capture upside, protect downside
Exiting Position
Emergency exit
Market
Immediate out
Profit target
Limit
Better fill price
Trailing profit
Trailing stop
Maximize gains
Common Combinations
Standard setup (most trades):
Entry: Limit order at key level
Stop: Stop loss below support
Target: Take profit at resistance
Breakout setup:
Entry: Market or limit above breakout
Stop: Inside consolidation range
Target: Measured move or trailing
Swing trade setup:
Entry: Limit at support
Stop: Below swing low
Target: Multiple take profits (scale out)
Order Type Mistakes
Using market orders for everything:
Problem: Excessive slippage
Fix: Use limits when not urgent
No stop losses:
Problem: Catastrophic losses
Fix: Always set stops before entry
Setting and forgetting:
Problem: Market changes, orders outdated
Fix: Review and adjust daily
Chasing with market orders:
Problem: Bad fills on extended moves
Fix: Wait for pullback, use limit
Master order types for better execution. Use the right tool for each scenario to maximize profits and minimize slippage.
Related: Risk Management | Trading Limits | Fee Structure
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