Lesson 9 of 21 · 3 min read
Orders: market, limit and stop
The three ways to tell a broker to buy or sell, and what each one does and doesn't guarantee.
Market order
A market order says: buy (or sell) now, at whatever the price is. It almost always goes through, but the price is the market's, not yours, and it can differ a little from the last price you saw.
Limit order
A limit order names a price: buy only at $50 or less, or sell only at $60 or more. The price is guaranteed; the trade is not. If the market never reaches your price, nothing happens.
Stop order
A stop order waits for a price and then becomes a market order. People use it to sell if a share falls to a certain level. Once triggered it sells at the market price, which in a fast fall can be lower than the level they chose.
How long an order lasts
A day order ends when the market closes if it hasn't been filled. A good-til-canceled order stays until it fills or you cancel it.
Whole shares and pieces
Orders used to be in whole shares only. Many brokers now accept an amount in dollars and buy a fraction of a share with it, so $10 can buy a piece of a share that costs $300.
Education only. Nothing here is a recommendation to buy or sell anything.