Market, limit, stop and stop-limit orders explained
Every trade starts with an order, and the order type decides two things: whether it fills, and at what price. Choosing the wrong one is one of the most common and most avoidable sources of a bad fill. This guide covers the four order types traders use most, with examples.
Examples use illustrative prices.
Market order
A market order fills immediately at the best prices available in the order book.
- What you control: quantity.
- What you give up: price. You get whatever the book offers.
- Fills: almost always, right away.
Example. BTC’s best ask is $60,000.00 for 0.2 BTC, and the next ask is $60,010.00 for 0.5 BTC. A market buy for 0.5 BTC fills 0.2 BTC at $60,000.00 and 0.3 BTC at $60,010.00. Average price: (0.2 × 60,000 + 0.3 × 60,010) ÷ 0.5 = $60,006.00.
That gap between the price you saw and the price you got is slippage. It grows with order size and in thin or fast markets.
Limit order
A limit order fills only at your chosen price or better.
- What you control: price and quantity.
- What you give up: certainty of a fill.
- Fills: only if the market reaches your price, and only as much as is available there.
Example. ETH trades at $3,000.00. A limit buy for 1 ETH at $2,950.00 rests on the book. If the price falls to $2,950.00 and sellers meet it, it fills at $2,950.00 or better. If the price never gets there, it never fills.
A limit order that rests on the book usually counts as a maker order, which many venues charge a lower fee than a taker order that fills immediately.
Stop order (stop-market)
A stop order waits until the market reaches a trigger price, then sends a market order.
- What you control: the trigger and the quantity.
- What you give up: the final fill price, once triggered.
- Common use: a stop-loss that closes a position if the price moves against it.
Example. You hold 1 ETH bought at $3,000.00 and place a sell stop with a trigger at $2,800.00. If ETH trades down to $2,800.00, a market sell is sent. In a fast fall the fill may be below $2,800.00, for example $2,785.00.
Stop-limit order
A stop-limit order also waits for a trigger, but when triggered it places a limit order at a price you choose.
- What you control: the trigger, the limit price and the quantity.
- What you give up: certainty of a fill once triggered.
Example. Same position. Trigger at $2,800.00, limit at $2,790.00. When ETH reaches $2,800.00, a limit sell for 1 ETH at $2,790.00 goes on the book. If the price keeps falling below $2,790.00 before it fills, the order sits unfilled, and the position stays open.
That is the core trade-off. A stop-market order protects against staying in a position; a stop-limit order protects against a bad price. Neither protects against both.
Side by side
| Fills immediately? | Controls price? | Always fills? | Typical use | |
|---|---|---|---|---|
| Market | Yes | No | Almost always | Getting in or out now |
| Limit | Only at your price | Yes | No | Entering or exiting at a set price |
| Stop (market) | After trigger | No | Almost always, once triggered | Stop-loss that must close |
| Stop-limit | After trigger, at your limit | Yes | No | Stop with a price floor or ceiling |
Time in force
Time in force sets how long an order stays live:
- GTC (good-til-cancelled): stays until it fills or you cancel it.
- IOC (immediate-or-cancel): fills what it can at once; the rest is cancelled.
- FOK (fill-or-kill): fills in full at once, or not at all.
- Post-only: only rests on the book as a maker order; cancelled if it would fill immediately.
Common mistakes
- Large market orders in thin markets. Slippage can be much bigger than expected. Check the order book depth first.
- Stop-limit gaps. Setting the limit too close to the trigger in a volatile market often leaves the order unfilled.
- Forgetting resting orders. A GTC limit order from last week can fill today.
- Quantity confusion. “Buy 5” can mean five units or five dollars. Confirm which before you submit.
That last point is why a good order ticket echoes the resolved quantity back before anything executes; see why confirm-by-default matters. For derivatives, read perpetual futures funding rates, explained and leverage, margin and liquidation.
Frequently asked questions
What is the difference between a stop order and a stop-limit order?
Both wait for a trigger price. When triggered, a stop order becomes a market order and fills at whatever price is available. A stop-limit order becomes a limit order at a price you set, so it will not fill worse than that price, but it may not fill at all if the market moves past it.
Why did my market order fill at a different price than I saw?
A market order consumes the order book at the best available prices. If the order is larger than the quantity at the best price, or the market moves while it is sent, the average fill can differ from the last price shown. That difference is called slippage.
Do limit orders pay lower fees?
On many venues, a limit order that rests on the book adds liquidity and is charged the maker fee, which is often lower than the taker fee charged to orders that fill immediately. Fee schedules vary by venue and account tier.
What does time in force mean?
Time in force sets how long an order stays active. Good-til-cancelled (GTC) stays until filled or cancelled, immediate-or-cancel (IOC) fills what it can at once and cancels the rest, and fill-or-kill (FOK) fills completely at once or not at all.
Hippo provides information, not investment advice.
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