Lesson 3 of 6 · Market Foundations
Order types
A market order fills immediately.
A market order executes at the best available price right now. You get filled fast. On liquid stocks the difference from what you saw is tiny. On thinly traded names, it can cost you more than expected.
Where your order sits on the ladder.
A market order hits immediately at the current price. A limit order waits at your chosen price. A stop triggers a market fill once price crosses the stop level. Each type makes a different trade-off between certainty of fill and certainty of price.
This one is an animated diagram in the app. See it in Vero.
Limits and stops serve different jobs.
A limit order only fills at your price or better. Use it for precise entries and exits. A stop order triggers a market fill once price crosses a level you set. Traders use stops to exit automatically when a trade goes against them.
You want to buy a thinly traded stock at a precise price without risking a worse fill. Which order fits?
Show the answer
B. Limit order. A limit order caps what you pay. On thin names, market orders can fill far from the quoted price.