Market, limit, or stop order?

Market, limit, and stop order are the three most commonly used order types. Each of them has their own distinctive features.

• A market order is an order to buy or sell a stock at the best available price. It has the best chance of filling, but the filling price is not certain.
• A limit order is an order to trade a security at a specified price or better. It guarantees the filling price, but it is not guaranteed to be filled.
• A stop order, also called a stop-loss order, is an order to trade a security when it has reached above or below a specified price. It is triggered at the stop price and filled as a market order.

To sum up:

1. Market orders work best for investors who want their orders to fill immediately and do not intend to control the filling price.
2. Limit orders allows investors to set a price they wish to fill at. However, the execution of the order is not guaranteed, since it is not known where the stock price will go.
3. Stop order allows investors to trade until the stock price reaches a specific level. However, once the order is triggered and turns into a market order, the order can be filled at a much higher price than anticipated.