Order types: market, limit, stop, stop loss and take profit
In this lesson you'll learn
- The difference between market and pending orders
- When to use a limit and when to use a stop
- How stop loss and take profit protect every trade
Market orders: now, at the current price
A market order buys at the ask or sells at the bid immediately. It's simple and certain to fill, but in fast markets the fill can differ from the price you saw: that difference is slippage.
Pending orders: later, at your price
| Order | Placed | Use it when you expect… |
|---|---|---|
| Buy limit | Below the current price | Price to dip to a level, then rise |
| Sell limit | Above the current price | Price to rise to a level, then fall |
| Buy stop | Above the current price | A breakout upwards to continue |
| Sell stop | Below the current price | A breakdown to continue |
Memory trick: limit = better price than now (buy cheaper, sell higher); stop = worse price than now, used to join a move once it's underway.
Stop loss and take profit
A stop loss (SL) closes the trade automatically at a set loss. A take profit (TP) closes it at a set profit. Both sit with your broker, so they work even if your computer is off.
- Place the SL where your idea is proven wrong, not at a random number of pips.
- A stop loss isn't guaranteed: in a gap or extreme news it can fill at a worse price. Some brokers offer guaranteed stops for a fee.
- A trade without a stop loss has no defined risk, which makes sizing (lesson "Risk per trade") impossible.
Trailing stops
A trailing stop follows the price at a fixed distance as the trade moves in your favour, locking in profit. In MetaTrader it only runs while the terminal is open; server-side trailing depends on the broker.
Common mistakes
- Placing a buy limit above the price (it fills at once, like a market order).
- Trading without a stop loss "because I'll watch it".
- Putting the stop exactly at an obvious round number where many stops cluster.
Check yourself
1. Price is 1.1650. You want to buy if it falls to 1.1620. Which order?
2. Price is 1.1650. You want to buy only if it breaks above 1.1700. Which order?
3. Is a normal stop loss always filled at its exact price?
Key takeaways
- Market orders fill now; pending orders wait for your price.
- Limit = better price than now; stop = worse price, to join a move.
- Every trade needs a stop loss placed where the idea is wrong.
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Education, not advice. Goldman Academy teaches how markets and tools work. Nothing here is a recommendation to buy or sell, and no lesson promises profits. Trading leveraged products carries a high risk of losing money; only trade money you can afford to lose. · Written by Goldman Academy, reviewed by Faisal