An order is an instruction to the market. Every entry and every exit is an order of some kind, and choosing the wrong type is a common and expensive beginner mistake.
Three types will cover everything you need.
Market order
A market order says: fill me now, at whatever the current price is.
- Use it when: getting in or out matters more than the exact price
- Advantage: it executes immediately, provided the market is open and liquid
- Disadvantage: you do not control the price you receive
The price you get can differ from the price you saw when you clicked, which is slippage, covered in Topic 8. In calm conditions the difference is negligible. Around news releases it can be substantial.
Limit order
A limit order says: fill me at this price or better, and wait until that happens.
- Buy limit: placed below the current price, filled if price falls to it
- Sell limit: placed above the current price, filled if price rises to it
And when to use one:
- Use it when: you have a specific price in mind and are willing to miss the trade if it never arrives
- Advantage: you control the price, and you pay no slippage on entry
- Disadvantage: the order may never fill, and price can move exactly as you predicted without you in the trade
A limit order is a statement about price, not about direction.
Stop order
A stop order says: once price reaches this level, enter me at market.
- Buy stop: placed above the current price
- Sell stop: placed below the current price
Entering at a worse price than the one currently available sounds counterproductive, and the logic is about confirmation. A trader might want to buy only once price has broken above a certain level, or sell only once it has broken below one.
- Use it when: you want movement to confirm itself before you enter
- Advantage: you stay out unless price does what you need it to
- Disadvantage: once triggered it becomes a market order, so slippage applies
Stop loss and take profit as orders
The two orders you will use most are covered in the next topic, and both are built from the types above.
- A stop loss is a stop order placed in the losing direction, which closes your position
- A take profit is a limit order placed in the winning direction, which closes your position
Order duration
Most futures platforms let you set how long an order stays alive. (Not available on MT5)
- Good till cancelled (GTC): remains until it fills or you remove it
- Day order: cancelled at the end of the session if unfilled
- Fill or kill, immediate or cancel: specialist types you can ignore for now
Key terms
- Order: an instruction to buy or sell
- Fill: the execution of an order
- Market order: execute now at the available price
- Limit order: execute only at a specified price or better
- Stop order: execute at market once a specified price is reached
- Pending order: any order placed in advance and waiting to trigger