Before you press the button you make two choices: what to trade and how to enter. The second one is the order type, and it decides the price you get and whether you get a fill at all.
Bid, ask and which one you use
Every market has two prices. The bid is where you can sell, the ask is where you can buy, and the ask is higher. If EURUSD shows 1.0845 / 1.0846, a market buy fills at 1.0846 and a market sell at 1.0845. The gap is the spread, paid on entry.
Market order
"Do it now, at the best price available." It fills almost always, at the bid or ask. It is the right choice when getting in matters more than the last pip. The risk is slippage: in a fast market the price can move between your click and your fill.
Limit order
"Only at this price or better." A buy limit sits below the current price and waits for the market to fall to it. A sell limit sits above and waits for a rise. You never pay more than your price, but the order may never fill if the market does not come.
Use it to buy a pullback or to sell into a level that has held before. See support and resistance.
Stop order
"Once the price reaches this level, trade." A buy stop sits above the current price; a sell stop sits below. It is the opposite of a limit: you are not trying to get a better price, you are waiting for the market to confirm a move, such as a breakout.
A stop order becomes a market order when it is hit. That has a consequence: if the price gaps past your level, for example over a weekend or on news, you fill at the first price available, which can be worse than the level you chose. A stop is a trigger, not a guaranteed price.
Stop-limit
A stop-limit has two prices. When the stop price is reached, it places a limit order at the second price instead of a market order. You avoid a bad fill, but if the price runs through your limit the order stays unfilled and you may miss the move.
The same words on a position
A stop-loss is a stop order that closes a trade at a loss you have chosen, and a take-profit is a limit order that closes it at a gain. See what a stop-loss is.
Choosing
| You want | Use |
|---|---|
| In now | Market |
| A better price, willing to wait | Limit |
| Confirmation of a breakout | Stop |
| Confirmation with a price cap | Stop-limit |
Try each type on a demo account and watch where it sits against the bid and ask. The order tells you what to expect; the first fill teaches you.
Educational content, not investment advice. Trading carries risk, including the loss of capital.