Investing · General financial education

Order types

Market, limit and stop are ways to instruct a purchase or a sale. None of them removes the risk that the price moves against you.

In more detail

A market order looks for the next counterparty that can be filled. The price is not fixed beforehand. A limit order may be filled only at the stated price or better. It can remain unfilled. A stop order becomes a market order when the trigger price is reached. The fill price can differ from the trigger. The US regulator's Investor.gov describes these types. Finmon places no order.

Background

In a fast market a market order can cost more than the last displayed price suggested. A limit guards against that price, but it may not trade at all. A stop does not cap a loss at the trigger price, because the fill after that is a trade of its own. These are mechanics, not signals. Finmon does not say which type fits.

An example

You want to sell once the price reaches 20. A stop order can trigger there and then be filled at a worse price if the market jumps. A limit order at 20 does not sell below 20, but it can sit unfilled. Finmon does not see the order book.

A common misconception

A stop order sells exactly at the trigger price and caps the loss there.

It starts a trade. The price of that trade can be worse than the trigger price.

Source: Investor.gov · types of orders. Last reviewed: 2026-11-09. Editorially reviewed on 2026-11-09. Next review 2027-11-09. Version 0.2.0. Finmon explains. It does not advise. Not investment, tax or legal advice.