Order types: market, limit, stop
What the chart shows before you choose an order
Look at the EUR/USD chart. On the right edge, a price is ticking. That price is the market price. It changes every second. On a one-minute chart, the last candle may show 1.0850, but by the time you click, it could be 1.0849 or 1.0851. The chart is a picture of the past. The market order fills at the next available price, which is not on the chart yet.
A market order is the simplest. You click buy or sell, and the broker fills you at the best price it can find right now. On a quiet chart, that price is very close to what you saw. On a fast chart, the price can move several pips in the time it takes your click to arrive. The chart shows you where the price was, not where it will be.
This is why the chart comes first. Before you place any order, ask what the chart is doing. Is it moving slowly in a narrow range, or jumping in long candles? A slow chart makes a market order less risky. A fast chart makes a market order more uncertain. The order type does not remove that uncertainty. It only decides which price you are willing to accept.
How a limit order waits on the chart
A limit order does not take the price showing now. It waits for a better price. If EUR/USD is at 1.0850 and you want to buy lower, you place a limit buy at 1.0830. That price is 20 pips below the market. The chart must fall to 1.0830 before your order can fill. Until then, your order sits in the broker's system, invisible on the chart unless you add it as a line.
A limit order can also be used to sell higher. If you already hold EUR/USD and want to sell at 1.0870, you place a limit sell at 1.0870. The chart must rise to that level. The key idea is that a limit order never chases the market. It waits for the market to come to it. That means you may get a better price, but you may also get no fill at all.
On the chart, a limit order is a horizontal line at your chosen price. If the price never touches that line, the order expires or stays open, depending on what you chose. If the price touches it, the order becomes a market order and fills at the next available price. That fill can be slightly different from your limit, especially if the chart is moving fast. The difference is called slippage, and it varies between brokers.
How a stop order triggers on the chart
A stop order is different from a limit order. It does not wait for a better price. It waits for a worse price. If EUR/USD is at 1.0850 and you place a stop buy at 1.0870, you are saying: once the chart reaches 1.0870, enter a market order. You expect the price to keep rising. The stop triggers the trade, but the fill price can be higher than 1.0870 if the chart is moving quickly.
A stop order can also protect an existing trade. Suppose you bought at 1.0850 and want to limit a loss. You place a stop sell at 1.0830. If the chart falls to 1.0830, the stop becomes a market order and sells your position. The actual sell price may be lower than 1.0830. That gap is normal in fast markets. It is not a broker error, though the size of the gap varies between brokers.
On the chart, a stop order is also a horizontal line. But the logic is reversed from a limit. A buy stop sits above the current price. A sell stop sits below it. If you mix them up, you can trigger a trade you did not intend. Always check which side of the market your stop line is on before you confirm the order.
One idea, three prices, one pip worth $10
| Step | Amount | Note |
|---|---|---|
| Market order | 1.0850 | The price on the chart right now. You buy or sell immediately at whatever the broker quotes. |
| Limit order | 1.0830 | You wait for a better price. The order fills only if the market reaches 1.0830. |
| Stop order | 1.0870 | You accept a worse price to enter once the market moves up to 1.0870. |
| Difference between limit and market | 20 pips | 1.0850 minus 1.0830 = 0.0020, which is 20 pips. |
| Value of 20 pips on one standard lot | $200 | One pip on one standard lot of EUR/USD is 10 units of the quote currency. 20 pips x $10 = $200. |
| Same $200 in pesos at an example rate of ₱57 to $1 | ₱11,400 | $200 x 57 = ₱11,400. This rate is an example only; the live rate varies. |
Your broker may round the entry price, charge a spread on top, or quote a slightly different price at the moment your order triggers. The figures above are for learning the arithmetic, not a promise of what you will get.
Doing it once, step by step
These steps show you how to place each order type on a chart, using EUR/USD around 1.0850 as the example. Read them in order once, then try them on a demo account.
- 01
Open the EUR/USD chart
Find the instrument in your trading platform. Set the chart to a one-minute or five-minute timeframe so you can see small price moves. The current price will be near 1.0850. Write that number down. You will use it to compare your order prices.
- 02
Place a market buy order
Click buy. The platform fills you at the next available price. Check the fill price on your order ticket. It may be 1.0850, or it may be 1.0851 or 1.0849. The difference is the spread and any slippage. This is the price you actually get, not the one you saw a second ago.
- 03
Place a limit buy order
Decide on a better price, such as 1.0830. That is 20 pips below 1.0850. Enter a limit buy at 1.0830. The order will not fill unless the chart falls to that level. If it fills, check the price. It may be 1.0830 or slightly different. If it never fills, the order stays open or expires.
- 04
Place a stop buy order
Decide on a worse price, such as 1.0870. That is 20 pips above 1.0850. Enter a stop buy at 1.0870. The order will not trigger until the chart reaches that level. Once triggered, it becomes a market order and fills at the next price. That fill can be higher than 1.0870 if the chart is moving fast.
- 05
Compare the three fills
Look at the three orders on your chart. The market order filled immediately. The limit order waited for a lower price. The stop order waited for a higher price. Each one gave you a different entry. The difference in pips is the reason order type matters.
- 06
Check the pip value in pesos
On one standard lot, one pip is $10. At an example rate of ₱57 to $1, that is ₱570 per pip. If your three entries differ by 20 pips, the difference is $200, or ₱11,400. The live exchange rate varies, so recalculate with the current rate. This shows why choosing the right order type is not a small detail.
The mistake most people make here
The common mistake is to use a market order when you actually wanted a specific price. A market order takes whatever is showing, which may be worse than the price you saw a second ago. A limit order waits for your price, but it may never fill. A stop order only becomes a market order once the price touches your level, so you can be filled at a worse price than the stop itself. Decide first which of the three you need, then place the order.Check yourself
If you place a limit order to buy EUR/USD at 1.0830 and the market is at 1.0850, how many pips better is your price?
20 pips. 1.0850 minus 1.0830 = 0.0020, and 0.0020 is 20 pips.
On one standard lot, what is 30 pips worth in USD?
$300. One pip is $10, so 30 x $10 = $300.
At an example rate of ₱57 to $1, what is $300 in pesos?
₱17,100. $300 x 57 = ₱17,100. The live rate varies.
Questions that come up next
What happens if I place a limit order and the chart never reaches my price?
The order stays open until you cancel it or it expires, depending on the time setting you chose. Your money is not taken, but it may be held aside by the broker. You can cancel it at any time before it fills. If the chart never touches your line, no trade happens.
Can a stop order fill at a worse price than the one I set?
Yes. A stop order becomes a market order once the price touches your level. The market order then fills at the next available price. If the chart is moving fast, that next price can be several pips away from your stop. The difference is called slippage, and it varies between brokers.
How do I know which order type to use from the chart alone?
Look at the last few candles. If the price is moving slowly in a narrow range, a market order is less uncertain. If the price is jumping in long candles, a market order may fill far from where you clicked. A limit order waits for a better price, but it may never fill. A stop order starts a trade when the price moves against you, so it is often used to limit a loss.
What does a limit order look like on the chart?
It is a horizontal line at the price you chose. The line does not move. If the price touches it, the order becomes a market order and fills at the next available price. That fill can be slightly different from your limit, especially if the chart is moving fast.
Is a stop order the same as a stop-loss order?
A stop-loss order is one use of a stop order. You place it at a worse price than your entry to close a trade if the market moves against you. A stop order can also be used to open a new trade when the price reaches a certain level. The trigger works the same way in both cases.
Do I need a different account type for limit and stop orders?
Not usually. Most brokers offer all three order types on standard accounts. The exact names and the way you set them may differ between platforms. Check your broker's help pages for the steps on your specific platform.
The words used on this page
- market order
- An order to buy or sell at the best price available right now. It does not wait for a specific price. The fill price is the next one the broker can get.
- limit order
- An order to buy or sell only at a chosen price or better. It waits for the market to reach your price. If the market never reaches it, the order does not fill.
- stop order
- An order that becomes a market order once the price touches a chosen level. That level is worse than the current price. It is often used to limit a loss or to start a trade when the market moves.
- slippage
- The difference between the price you expected and the price you actually got. It happens when the market moves fast between the moment you click and the moment the order fills. The amount varies between brokers and market conditions.
- pip
- A small unit of price movement for a currency pair. For EUR/USD, one pip is 0.0001. On one standard lot, one pip is worth $10.
What to take away
- A market order takes the price showing now, which may change before your click arrives.
- A limit order waits for a better price you choose, but it may never fill.
- A stop order triggers once the price reaches a worse level, then fills at the next available price.
- The chart shows where the price was, not where it will be, so choose the order type that matches what you see.