Understanding Stock Orders: Market, Limit, and Stop Orders

A market order is an instruction to buy or sell a stock immediately at the best available current price. It guarantees execution but not the price.

A limit order sets the maximum price you're willing to pay (for buys) or minimum price you're willing to accept (for sells). It guarantees price but not execution.

A stop order (or stop-loss order) becomes a market order once the stock reaches a specified price. It's commonly used to limit losses on existing positions.

A stop-limit order combines features of stop and limit orders. When triggered, it becomes a limit order rather than a market order.

Understanding when to use each order type is crucial for managing risk and getting the best execution for your trades.