Understanding Market Orders
Knowing how orders work is fundamental to successful stock trading.
Order Book Basics
What is the Order Book?
- List of all buy and sell orders
- Organized by price
- Shows market depth
- Updates in real-time
Bid and Ask
- Bid: Highest price buyers will pay
- Ask: Lowest price sellers will accept
- Spread: Difference between bid and ask
- Tighter spread = more liquid
Order Types Explained
Market Order
- Buy or sell immediately
- Takes best available price
- Guaranteed execution
- Price may slip in fast markets
Limit Order
- Set your desired price
- Only fills at your price or better
- May not execute if price does not reach
- Better for precise entries
Stop Order
- Triggers when price reaches level
- Becomes market order when triggered
- Used for stop losses
- Can slip in volatile markets
Stop-Limit Order
- Combines stop trigger with limit price
- More control over execution
- May not fill in fast moves
- Two prices: stop and limit
Order Modifiers
Day Order
- Expires at market close
- Most common type
- Must re-enter next day
GTC (Good Till Cancelled)
- Stays active until filled or cancelled
- Useful for target entries
- Review regularly
Fill or Kill
- Must fill entire order or cancel
- Used for large orders
- All or nothing
Practical Tips
When to Use Market Orders
- Very liquid stocks
- Need immediate execution
- Small position sizes
When to Use Limit Orders
- Less liquid stocks
- Precise entry levels
- No urgency to enter
Common Mistakes
- Market orders in pre-market (wide spreads)
- Limit orders too far from market (never fill)
- Not using stops on every trade
- Forgetting about GTC orders left open
Lesson Discussion