Market Orders
A market order executes immediately at the best available price. You click buy or sell, and the trade fills right now. It's the simplest order type and the one most beginners use.
The advantage is speed — you get in immediately. The risk is slippage: during fast-moving markets, the price you see on screen may not be the price you get. The difference is usually small on liquid instruments, but can be significant during major news events.
Limit Orders
A limit order sets a specific price at which you want to enter or exit the market. A buy limit is placed below the current price — you're saying 'I'll buy, but only if it drops to this level.' A sell limit is placed above the current price.
Limit orders give you price control. The trade-off is that the market may never reach your price, and the opportunity passes. They're commonly used when you've identified a support or resistance level and want to enter at that precise point.
Stop Orders
A stop order becomes a market order when a specified price is reached. A buy stop is placed above the current price — used for breakout entries. A sell stop is placed below — used for the same purpose on the downside.
The most important stop order is the stop-loss — an order placed to automatically close a losing position at a predetermined level. It limits your downside on every trade. Using stop-losses consistently is the single most important habit in risk management.
Trailing Stops and Take-Profit Orders
A trailing stop moves with the market in your favour but stays fixed when the market moves against you. If GBP/USD rises 50 pips from your entry and you have a 30-pip trailing stop, your stop is now 20 pips in profit. If the market reverses, you're closed out with a gain instead of a loss.
A take-profit order closes your position automatically when it reaches a target price. It locks in gains without requiring you to monitor the market. Combining a stop-loss with a take-profit creates a defined risk-to-reward ratio for every trade.
Key Takeaways
- Market orders execute immediately but offer no price guarantee
- Limit orders give you price control but may not fill
- Stop-loss orders are non-negotiable — use them on every trade
- Trailing stops lock in profits as the market moves in your favour
- Combining stop-loss and take-profit defines your risk-to-reward ratio
