Order Types in Trading: Every Order Explained

An order type is the instruction that tells a trading platform how and when to buy or sell. The core trade-off never changes: a market order guarantees a fill but not the price, while a limit order guarantees the price but not the fill. Every other order type is a combination of those two ideas plus a trigger or a link between orders.

Choosing the right order for entries and exits is a practical part of risk management in trading, because the order decides how much slippage you accept and whether your protective exit actually fills.

Quick answer: The main order types in trading are market orders (fill now at the best available price), limit orders (fill only at a set price or better), stop orders (become market orders once a trigger price trades), stop-limit orders (become limit orders at the trigger), trailing stops, take-profit orders, OCO orders and bracket orders, each controlled by a time-in-force setting.

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What are the main order types in trading?

The main order types are market, limit, stop (stop-market), stop-limit, trailing stop and take-profit, plus two linked structures: OCO (one-cancels-the-other) and bracket orders. Each answers two questions: will the order definitely fill, and will it fill at a price you control?

What is a market order?

A market order is an instruction to buy or sell immediately at the best price available. A market buy fills at the lowest ask and a market sell at the highest bid, so you always pay the bid-ask spread.

In a liquid market it fills almost instantly, but you do not control the price. If the order is larger than the volume at the best quote, or the market is moving fast, it fills at progressively worse prices. That gap between expected and actual price is slippage.

What is a limit order?

A limit order is an instruction to buy or sell only at a specified price or better. A buy limit at 98.50 fills at 98.50 or lower; a sell limit at 101.50 fills at 101.50 or higher. If price never reaches your level, the order does not fill.

Limit orders give you price control at the cost of sometimes missing a trade. Gianluca Pizzituti, Velotrade's co-founder, is firmly on this side of the debate: "Always limit orders. Always." The full comparison, including how market orders behave when liquidity disappears, is in market order vs limit order.

Where does each order sit relative to price?

Limit orders sit on the "better price" side of the market, and stop orders sit on the "breakout" side. The chart shows the four basic pending orders with price at 100.

• Sell limit at 101.50 (above price): sells only if price rises to 101.50 or higher. Takes profit on a long or enters a short at a better level.
• Buy stop at 101.00 (above price): buys once price trades up through 101.00. Enters a breakout or stops out a short.
• Sell stop at 99.00 (below price): sells once price trades down through 99.00. Acts as a stop loss on a long or enters a breakdown short.
• Buy limit at 98.50 (below price): buys only if price falls to 98.50 or lower. Enters a long on a pullback or takes profit on a short.

Limit orders wait for price to come to you; stop orders wait for price to prove a move by trading through a level.

What is a stop order (stop-market)?

A stop order, or stop-market order, is a pending order that becomes a market order once its trigger price (the stop price) trades. A sell stop at 99.00 does nothing while price is above 99.00; once price trades at or through 99.00, it is sent as a market sell.

Because it becomes a market order, a triggered stop almost always fills, but the price is not guaranteed and can be well beyond the stop in a gap. Stop orders are the standard tool for a stop loss.

What is a stop-limit order?

A stop-limit order is a pending order that becomes a limit order, not a market order, once its stop price trades. It has two prices: the stop that activates it and the limit that sets the worst fill you accept. The risk is that it may never fill, as the chart shows.

Price gaps down through a sell stop at 100.00. The stop-market order fills near 98.60, which is 1.40 below the stop: a poor fill, but the position is closed. The stop-limit with a 99.50 limit also triggers, but price never trades back up to 99.50, so the order sits unfilled while price keeps falling. That is why most traders use stop-market orders for protective stops and keep stop-limits for entries. The full mechanics are in the stop-limit order guide.

What is a trailing stop?

A trailing stop is a stop order whose trigger follows price in your favour by a set distance and never moves back against you. It locks in gains as a trend extends.

1. You buy at 100.00 with a trailing stop 2.00 below price, so the stop starts at 98.00.
2. Price rises to 106.00. The stop moves to 106.00 minus 2.00, which is 104.00.
3. Price falls back. The stop stays at 104.00 and triggers there, locking in about 4.00 per unit before slippage and costs.

Distances can be fixed, percentage-based or volatility-based (for example a multiple of the ATR indicator). Too tight gets hit by noise; too wide gives back much of the move.

What is a take-profit order?

A take-profit order is a limit order at a target price that closes a winning position automatically. On a long it is a sell limit above price; on a short, a buy limit below. It fills at the target or better, but only if price trades there.

A stop 1.00 below entry and a take-profit 2.00 above fixes a 2:1 reward-to-risk before entry, which you can check against your win rate with the risk-reward ratio guide.

What is an OCO order?

An OCO (one-cancels-the-other) order links two orders so that when one fills, the other is cancelled automatically. The common use is a take-profit above price and a stop loss below: whichever is hit first closes the trade and removes the other, so no orphan order can open an unwanted position. OCO also works for entries, such as a buy stop above a range and a sell stop below it.

What is a bracket order?

A bracket order is an entry order with an attached stop loss and take-profit that activate only once the entry fills, with the stop and target linked as an OCO pair.

Worked example: a buy limit at 98.50 with a stop at 97.50 and a take-profit at 100.50. Risk is 98.50 minus 97.50, or 1.00; reward is 100.50 minus 98.50, or 2.00. Once the entry fills, whichever exit is hit first cancels the other. The exit plan exists from the moment you are in the trade.

What does time in force mean?

Time in force is the setting that decides how long an order stays active before it is cancelled. It applies to almost every order type.

On 24-hour markets such as crypto and forex, "day" is usually defined by the platform's daily cut-off rather than an exchange close.

Order types compared: which guarantee a fill or a price?

Which order types should you use for entries vs exits?

Choose based on which risk you would rather carry at each stage: a bad price or no fill.

For entries, a missed trade costs only an opportunity, so price control usually wins:

• A limit order to enter at a planned level, such as a pullback to support.
• A stop or stop-limit to enter a breakout, with the stop-limit capping what you pay.
• A market order only when being in now matters more than the price, and only in liquid markets.

For exits, failing to get out can cost far more than slippage, so certainty usually wins on the loss side:

• A stop-market order for the stop loss.
• A take-profit limit for the target.
• A trailing stop to ride a trend.
• OCO or bracket orders so the stop and target cancel each other.

Common order type mistakes

1. Using a stop-limit as a stop loss. On a gap, the limit can be skipped and the position stays open.
2. Market orders around news. Around releases such as NFP, spreads widen and fills can land far from the last price.
3. Forgotten GTC orders and orphans. An old limit, or a stop left after closing a trade manually, can open a position you no longer want.

Broker disclosures and academic studies consistently find that most retail day traders lose money. Better order handling reduces avoidable costs, but it does not create an edge on its own.

How do order types work in a prop firm evaluation?

In an evaluation, a bad fill counts the same as a bad decision. At Velotrade, a multi-asset prop trading firm offering simulated evaluations, the DXtrade order ticket supports Market, Limit and Stop orders, with Stop Loss and Take Profit protection. Velotrade has disabled stop-limit orders. A triggered Stop Loss is sent as a market order, so it can slip on a gap, while the Take Profit is a limit-style exit at your target. The Velotrade get-started guide walks through the ticket step by step.

The only hard limits are the daily loss limit and the static maximum drawdown. Stop losses are not required, and position size is limited only by the leverage available per instrument. The daily loss limit resets at 00:30 UTC and is set from the higher of balance or equity (5% on CLASSIC 2-Step, 4% on CLASSIC 1-Step, 3% on PRO 1-Step). News trading is allowed, so the slippage points above apply if you trade releases.

Can AI help with order types and execution?

AI can analyse a trade journal to show how often stops slipped or limit entries were missed, test order rules in backtesting, and help draft rule-based logic for AI trading strategies.

It does not remove execution risk. Gaps, thin liquidity and widening spreads affect any order, and a model built on calm markets can behave badly in fast ones. Human judgement is still needed to decide whether a bad price or no fill is the acceptable risk for each trade.