Order types: market, limit, stop
What you learn in 3 minutesOn a chart, every entry has a price. An order type decides which price you get: the one showing now, a better one you choose, or a worse one that starts a trade once the market moves. The difference between these three can be a few dollars or a few hundred pesos on the same idea, so it is worth knowing before you click buy or sell.
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.
The mistake 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.