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Order types: market, limit, and stop

Order Types: Market, Limit, Stop

Trading

Definition

A Market order fills immediately at the next available price. A Limit order fills only at the price you set or better, so it may not fill at all. A Stop order becomes a Market order when the price touches the level you set, which is how a stop loss is placed.

Detailed explanation

The choice between types is a choice between price certainty and execution certainty. A limit order gives an exact price without slippage, but the market can run away without you. Market and stop orders guarantee an exit, but in sharp movements or during news, the fill can be far from the price you saw. In a prop account, there's another consideration: even a pending order that wasn't filled can violate a rule. In some firms, pending orders must be canceled before the daily close or before news releases.

An example from the prop world

ES trades at 6,000. A buy limit at 5,995 will only fill if the price drops there. A sell stop at 5,990 on a long position will exit you when the price reaches that level, even if the actual fill is 5,989.75.

How it works at the firms on this site

Based on the rules listed on our firm pages. Rules get updated, so check the firm's page before buying.

OCO and Bracket orders

A Bracket is an entry order that comes with a stop and a profit target. OCO (One Cancels Other) links the two exit orders: when one is filled, the other is canceled automatically.

סטופ לוס

An exit order that closes a losing trade at a predetermined level. In a prop account, a stop is not just good risk management: it's what separates a bad trade from crossing the drawdown threshold and failing the account.

Slippage

The difference between the price at which you wanted to enter or exit and the price at which the order was actually filled. It mainly occurs with market and stop orders, during sharp movements, news, and hours of low liquidity.

Trailing drawdown (order)

A stop order that automatically moves with the price when the trade is profitable, at a fixed distance, and does not move back. It locks in some profit without deciding in advance where to exit. Do not confuse it with the trailing drawdown: the trailing stop is your tool, and the trailing drawdown is an account rule.

News trading policy

This is a risk management rule in funded trading accounts that prohibits traders from opening, closing or modifying active positions within a set time window (usually a few minutes) before, during and after the release of major high-impact economic events (Tier One).

Trade copying

Automatically duplicating every trade from a lead account to follower accounts, so you trade once across several accounts. It's done with software such as TradeSyncer or Replikanto, or with a copy tool built into the platform.