⚡ Trading & Risk · Lesson 1 of 11 · 8 min
Order Types 101
🎛️ Smashing 'buy' at whatever price the market screams at you is how beginners trade. Pros use four order types — and one of them lets you buy in your sleep.
💡 Key idea
Market = now at any price. Limit = your price or better. Stop = auto-sell trigger if price drops.
🧠 Why it matters
Four core orders. MARKET: buy/sell instantly at the current price (fast, but you take the spread). LIMIT: set the exact price you'll accept and wait — it only fills at your price or better. STOP (stop-loss): a trigger that becomes a market sell once price falls to your level — your safety hatch. STOP-LIMIT: a stop that turns into a limit order (more control, but it can miss if price gaps straight past).
🌍 In the real world
💡 Going on vacation but nervous about a stock? A limit SELL at your target locks in profit if it spikes, and a STOP sell caps your loss if it tanks. Place them together as a 'bracket' or OCO (one-cancels-other) order so whichever fills cancels the other — both while you're on a beach ignoring your phone.
📌 Takeaways
- Market = instant, but takes the spread
- Limit = only fills at your price or better
- Stop = auto-sells when price hits your trigger
📖 Terms in this lesson
Market order: Buy or sell right now at whatever the current price is.
Limit order: Buy or sell only at the price you set, or better.
✅ Test yourself
A LIMIT order...
- Fills instantly at any price
- Only fills at your set price or better
- Is illegal
- Always loses money
Answer: B · Only fills at your set price or better
A limit order executes only at your specified price or better — you wait instead of crossing the spread.
What's a STOP order mainly used for?
- Buying the top
- Auto-selling to cap a loss when price falls
- Paying taxes
- Nothing
Answer: B · Auto-selling to cap a loss when price falls
A stop triggers a sale once price drops to your level — a safety hatch against bigger losses.
A MARKET order's downside is...
- It's too slow
- You take whatever the current price and spread are
- It never fills
- It's banned
Answer: B · You take whatever the current price and spread are
Speed comes at a cost: you accept the current price and cross the spread.
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