Market, limit and stop orders explained
Three order types, three different promises. Which one to reach for, what each actually guarantees, and the one thing a market order can never promise you.
Every position starts with an order, and the order type you choose decides which of two things you get to control: the price you pay, or the certainty that you trade at all. You do not get both. Understanding that trade-off is most of what there is to understand about order types.
Market orders
A market order says: fill me now, at whatever the market is offering. On MGG it prices against the current quote and completes immediately.
What it guarantees is the fill. What it cannot guarantee is the price. Between the moment you press the button and the moment the order completes, the quote can move. In a calm market that difference is negligible. In a fast one it is not, and the gap between the price you saw and the price you got has a name: slippage.
Use a market order when being in the position matters more than the exact level you get in at.
Limit orders
A limit order says: fill me at this price or better, and wait if you have to. A buy limit at $67,000 will not pay $67,400. A sell limit at $70,000 will not accept $69,600.
This inverts the guarantee. You control the price completely, and give up the certainty of trading. If the market never reaches your level, the order simply sits there. Sometimes that is exactly right, and sometimes it means watching a move happen without you.
Limit orders are the natural choice when you have a level in mind, when the market is moving quickly enough that slippage would matter, or when you are placing an order in advance rather than reacting to something in front of you.
Stop orders
A stop order is dormant until the market trades through a trigger level you set, at which point it activates. It is the only one of the three that is defined by what has to happen before it does anything.
Two common uses:
- Entering on a breakout. You want to buy only if the price proves itself by breaking above a level, so you set a buy stop above the current price.
- Protecting a position. You want out if the price falls through a level, so you set a sell stop below it. This is the same idea as a stop loss, and on MGG you can attach one directly to a position instead of placing a separate order.
The thing to keep in mind is that a triggered stop becomes an order that still has to be filled, so it inherits whatever fill behaviour applies at that moment. A stop protects you from a level being breached; it does not promise the exact price you leave at.
Choosing between them
Reduced to a single question each:
- Market: do I need to be in or out right now?
- Limit: do I have a price in mind that I will not go past?
- Stop: do I want to act only once the market reaches a level?
On MGG, the order ticket adapts to the type you pick. A market order prices against the live quote; limit and stop orders take a level from you and show what the position would cost if it fills there. In all three cases the order value, the fee and the balance you are left with are calculated before you confirm.
Attaching risk levels
All three types accept an optional take profit and stop loss on the same ticket. They are never required, and you can add, change or remove them after the fill. The companion article on take profit and stop loss covers how to place them.