Order Types Explained: Market, Limit, Stop and Bracket

Before you read: How Markets Work: Bids, Asks, Spread and Liquidity

What you will learn

• How market, limit, stop and stop-limit orders work, and what each one trades off.
• What a bracket order is as a concept.
• Why fills can differ from the price you expected: slippage, gaps and partial fills.

What is an order?

When you click “buy”, what exactly are you asking the market to do?

An order is an instruction to your broker to buy or sell a quantity under stated conditions. The conditions decide two things that usually pull against each other: certainty of execution (will it trade?) and certainty of price (at what price?). Each order type is a different balance between them. This lesson describes how they work. It does not suggest which to use or where to place one; that depends on circumstances these lessons cannot know.

What is a market order?

If you need to trade now, what do you give up?

A market order asks to trade immediately at the best price available. A market buy takes the lowest ask; a market sell hits the highest bid (see how markets work).

• It is the order type most likely to be filled, in normal conditions.
• It gives no control over price. If the best price has only a small quantity, the rest of the order fills at the next prices in the book, which may be worse.

In a liquid, calm market the difference may be small. In a thin or fast market it can be large.

What is a limit order?

If you name your price, what might happen instead of a trade?

A limit order sets the worst price you will accept: a maximum for a buy, a minimum for a sell. A buy limit at 99.50 can fill at 99.50 or lower, never higher.

• It controls price.
• A fill is not assured. Price may never reach the limit, or may touch it and leave before your order’s turn comes. At most exchanges orders at the same price are queued, often by time of arrival.

A limit order that sits in the book is a passive order: it adds liquidity and waits for someone else to trade against it.

What are stop and stop-limit orders?

What is the difference between an order that waits and an order that wakes up?

A stop order stays dormant until price reaches a trigger level, the stop price. Then it becomes a market order.

• A sell stop sits below the current price and triggers if price trades down to it.
• A buy stop sits above the current price and triggers if price trades up to it.

Traders use stop orders both to exit positions and to enter them. Once triggered, the order trades at whatever price is available. In a fast move or a gap, that price can be noticeably worse than the stop price. A stop order does not cap a loss at the stop price. It is a trigger, not a promise.

A stop-limit order also waits for a trigger, but then becomes a limit order instead of a market order. That adds price control and removes certainty: if price jumps past the limit, the order may not fill at all, and the position stays open while price keeps moving.

Order types diagram

Illustrative diagram constructed for teaching. Not real market data.

The diagram shows a constructed price line with a buy limit below price, a sell limit above, and a sell stop and buy stop marked as triggers, plus a gap that shows a stop filling beyond its trigger. It is constructed for teaching and is not real market data.

What is a bracket order?

Can an entry and its possible exits be sent as one package?

A bracket order is an entry order linked to two exit orders: a stop on one side and a target (usually a limit order) on the other. When the entry fills, both exits go live. When one exit fills, the other is canceled. Platforms implement brackets differently, and some brackets are held by the broker or platform rather than at the exchange, so the details are in each platform’s documentation. As with any stop, the stop side of a bracket can fill at a worse price than its trigger.

Why does the fill differ from the price on screen?

Between the moment you decide and the moment you trade, what can change?

Several things can separate the price you expected from the price you got.

• Slippage is the difference between the expected price and the fill. It comes from the spread, from prices changing while the order travels, and from orders larger than the size available at the best price.
• Gaps happen when price moves from one level to another with no trading in between, for example across a session break or on sudden news. Orders triggered in a gap fill at the first available price beyond it.
• Partial fills occur when only part of an order trades. A limit order for 10 contracts or shares may fill 3 and leave 7 waiting, or never fill the rest.

Illustrative arithmetic only, not a recommendation: a sell stop has a stop price of 100.00. Price gaps from 100.40 to 99.60 on news. The order triggers and fills at 99.60, so the fill is 0.40 below the stop price. If the order were a stop-limit with a limit of 99.90, it would trigger but not fill, because no trades occurred between 99.90 and 100.00.

On leveraged products such as futures, a fill beyond the stop price can make a loss larger than planned. Leverage can cause losses larger than the amount invested.

What is time in force?

How long should an instruction stay alive?

Orders also carry a time in force: how long they stay active. Common choices include day orders (canceled at the session’s end) and good-till-canceled orders (left working until filled or canceled, often with a broker maximum). Some markets also offer immediate-or-cancel instructions. Names and rules vary by broker and exchange.

What this does not tell you about order types

• Which order type or price level suits any situation; these lessons describe mechanics only.
• How a particular platform builds or holds its orders; check its documentation.
• Whether an order will be filled, or at what price, in a fast market.
• Anything about where price is likely to go.

Watch the lesson explained

Check yourself

Reflect on these; there is no score.

1. In your own words, what does a market order give up, and what does a limit order give up? Hint: price certainty versus execution certainty.
2. Why can a sell stop fill below its stop price? Hint: once triggered it becomes a market order.
3. A stop-limit is triggered but never fills. What must have happened to price? Hint: it moved past the limit without trading at acceptable prices.
4. Describe a partial fill and one reason it might happen. Hint: size available at the price.

Last reviewed November 8, 2026. Spotted a mistake? Report an error.