What is LIMIT/MARKET ORDER/STOP LIMIT order?

1. Limit order

A limit order is one of the most basic order types. It allows the trader to specify a price and amount they would like to buy or sell.

Example: If the current market price is 360 and I want to buy lower than that at 359, then I would place a limit buy order at 359. If the market reaches 359 and a seller’s ask matches with my bid, my limit order will be executed at 359.

 2. Market order

• A market order is an order type that executes immediately against the best price available. As long as there are willing sellers and buyers, market orders are filled. A market sell will match the best available bids on the order book, and a market buy will match against the best available asks on the order book.
• Market orders are often used when rapid execution is prioritized over the price at which the order executes. When placing this order, the trader prefers the trade to happen immediately at the current best price available.

3. Stop-limit order

A stop-limit order executes as a limit order within a specific price range (buy or sell limit price or better) and not as a market order. With a stop-limit, the trader sets a stop price at which the order is triggered and a limit price at which the order may be filled. The order will only execute between the stop and the limit as long as matching bids or asks are available on the book. If the market price surpasses the limit price, the order may not be entirely filled.

Once the stop of a stop-limit order is triggered, the limit order is automatically added to the book. If the market price does not reach the stop price, the order will not be triggered and will remain unfilled. If the stop is triggered and the limit order is placed, but the market price does not reach the limit price, the order will also go unfilled.

If the market price is moving quickly enough and gaps above the limit price, there may not be enough matching offers available between your stop and limit to fulfill the order.

• Example: If a trader would like to buy once the market price reaches 360, but not pay more than 362, then a stop price of 360 and limit price of 362 will be specified at the same time using a stop-limit order. If the market price reaches 360, the order is triggered and will match the best available ask up to 362. If the market price moves to 362.01 or above, then the order may go partially unfilled due to the limit price.