Order types: market, limit, stop, stop loss and take profit

Market orders, buy and sell limits, buy and sell stops, stop loss, take profit and trailing stops explained with one simple price map.

Beginner Lesson 4 of 10 · 3 min read

⚠️ Risk warning: CFDs and leveraged forex are complex instruments with a high risk of losing money rapidly. Most retail accounts lose money. This content is education only, not investment advice or a recommendation.

Where pending orders sitCurrent priceSell LimitSell higher, expect a dropBuy StopBuy higher, expect a breakoutBuy LimitBuy lower, expect a bounceSell StopSell lower, expect a breakdownAbove the priceBelow the price
Where pending orders sit

An order tells your broker what to do and at what price. Choosing the right one is how you control your entry, your exit and your risk.

Market orders

A market order buys or sells immediately at the best available price: you buy at the ask and sell at the bid. Fast, but in a fast market the fill can differ slightly from the price on screen; that difference is slippage.

Pending orders

A pending order waits until the price reaches a level you choose. There are four basic kinds:

  • Buy Limit: buy below the current price, expecting a bounce up from there.
  • Sell Limit: sell above the current price, expecting a drop from there.
  • Buy Stop: buy above the current price, expecting a breakout to continue higher.
  • Sell Stop: sell below the current price, expecting a breakdown to continue lower.

A simple memory trick: limit orders get you a better price than now; stop orders get you in once the move is already happening. MetaTrader 5 adds Buy Stop Limit and Sell Stop Limit, which combine the two (see the MT5 orders guide).

Stop loss and take profit

A stop loss (SL) closes your trade automatically if the price moves against you to a set level. A take profit (TP) closes it when your target is reached. Placing a stop loss before you enter is the single most important habit in trading: it turns an unknown loss into a planned one.

Example

Gold is at 3,880. You place a Buy Limit at 3,870 with a stop loss at 3,860 and take profit at 3,900. If filled, you risk $10 per ounce to make $30: a 1:3 risk-to-reward ratio.

Trailing stop

A trailing stop moves your stop loss behind the price as the trade goes your way, locking in profit while giving the trade room. In MT5 the trailing stop runs in your terminal, so it only works while the platform is open and connected.

Note: in very fast markets or over a weekend gap, a stop loss can be filled at a worse price than set. A guaranteed stop, where offered, costs extra.

✍️ Quick quiz

Check what you learned. Your answers stay in this browser.

1. You want to buy EUR/USD only if it rises above 1.1000 (now 1.0950). Which order?

Show answer

Buy Stop. A buy order above the current price is a Buy Stop: it triggers on the breakout.

2. You want to sell gold if it rallies to 3,920 (now 3,900) because you expect resistance there. Which order?

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Sell Limit. Selling above the current price is a Sell Limit.

3. What does a stop loss do?

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Closes the trade automatically at a chosen loss level. A stop loss caps the loss by closing the trade at your chosen level (gaps aside).

4. Risk $10 to make $30 is a risk-to-reward ratio of…

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1:3. You risk 1 unit to make 3 units: 1:3.