Order types explained: market, limit and stop orders
โ๏ธ TradeAcademy๐ Basicsโฑ๏ธ 2 min read
Every trade starts with an order. Knowing which order to use lets you enter at the price you planned instead of chasing the market, and lets you trade while you're at work or asleep.
Market orders
A market order buys or sells right now at the best available price.
- Buy fills at the ask (the higher price). Sell fills at the bid (the lower price). The gap between them is the spread.
- Use it when getting in now matters more than the exact price.
- In fast markets the fill can differ from the price you saw: that's slippage.
Pending orders
A pending order waits on the broker's server and triggers only if price reaches your level. MetaTrader 5 has four basic types:
| Order | You want toโฆ | Placedโฆ | Idea |
|---|---|---|---|
| Buy Limit | Buy cheaper | Below the current price | Buy a pullback to support |
| Sell Limit | Sell higher | Above the current price | Sell a rally into resistance |
| Buy Stop | Buy if price breaks up | Above the current price | Join a breakout |
| Sell Stop | Sell if price breaks down | Below the current price | Join a breakdown |
Memory trick: limit = a better price than now; stop = a worse price than now, because you want confirmation that price is moving your way.
MetaTrader 5 also has Buy Stop Limit and Sell Stop Limit: when the stop price is hit, a limit order is placed instead of a market order. Useful, but master the four basic types first.
Stop loss and take profit are orders too
A stop loss is a stop order that closes your position at a worse price; a take profit is a limit order that closes it at a better price. Attach both to every pending order so the trade is protected the moment it fills.
Expiry
Pending orders can be GTC (good till cancelled), Today or until a specified date and time. Set an expiry for setups that only make sense today, so a forgotten order doesn't fill next week in a different market.
Placing orders in MetaTrader 5
- Desktop: press F9 or click New Order โ choose Market Execution or Pending Order โ set type, price, SL, TP and expiry.
- Mobile: tap + or the trade icon โ choose the order type from the list at the top.
- From the chart: right-click on the price level โ Trading โ Buy Limit / Sell Limitโฆ
Which should you use?
- Planned setups at a support/resistance level โ limit orders, set in advance.
- Breakouts โ stop orders just beyond the level, with a stop loss on the other side.
- "I need out now" โ market order.
Always size the order from your risk first (what is a lot?), and check the spread before market orders around news.
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How to size every gold trade from your risk, plus a bonus ebook on opening your account and setting up MetaTrader 5.
Disclaimer: Not financial advice. Trading involves significant risk of loss.