PRACTICAL GUIDE
Explained concepts, worked cases and practice to test your understanding. Numerical examples are hypothetical; replace assumptions with your instrument specifications.
The essentials
A market order seeks execution at an available price. A limit order sets a price-limit condition; a stop triggers at a threshold and then follows the product's execution rules. Triggering and execution are separate events.
Understand the mechanism, not just the definition
Choosing an order means prioritizing price or execution. A market order seeks available liquidity; a limit controls a price boundary but may never fill; a stop needs a trigger and then follows its execution mechanism. A conventional stop loss does not guarantee a maximum loss. Check bid/ask triggering and minimum distances.
Example and verification
In demo, compare a buy limit below the current price with a buy stop above it. Record threshold, volume, expiry and outcome. Do not place a real order to discover a field's meaning; read the platform documentation first.
Worked case, step by step
At ask 1.1000, a buy limit at 1.0950 waits for a decline while a buy stop at 1.1050 waits for a rise. They are not two names for the same instruction. After a gap, a stop can trigger and fill elsewhere. Describe the intended scenario before choosing the order type.
What to verify when applying this
Check supported order types, minimum distances and gap rules for the account and instrument. An ordinary stop does not guarantee the final price. Distinguish an entry stop from a stop loss even though both use thresholds.
Practice: verify it in your environment
Learn by observing the process and keeping its data. Complete this practice in demo or using documentation, without sending real orders or adding capital for the exercise. Record differences between the example and your account specifications.
- Draw buy limit, sell limit, buy stop and sell stop relative to the current price.
- Test in demo and distinguish submission, triggering, execution and cancellation.
Test your understanding
Try the question before revealing the answer. Justify the conclusion and its assumptions rather than memorizing a number.
Does a buy limit guarantee a purchase when the chart touches its level?
Reveal the explained answer
No. Trigger price, liquidity and execution rules matter. The chart may show bid while the buy depends on ask.
Sources for further learning
Consult original documentation to check units, features and terms. Your account specifications take precedence over examples in this guide.
