Basic Order Types

The whole unit on one sheet: where each order sits relative to the market, and what it becomes once triggered.

What Does Each Order Become When Triggered?

• Market order: no price condition, fills immediately at the best available price. Guarantees execution, not price. In thin or fast markets, the fill can drift from the quote on screen (slippage). Market with protection caps a fill to a set range but still promises only a fill, not a price.
• Stop order: rests dormant until the market trades at or through the stop price, then becomes a market order. Guarantees a fill once triggered, not the stop price itself.
• Stop-limit order: same trigger as a plain stop, but becomes a limit order instead. Guarantees a price (or better), not a fill; a market that gaps past the limit leaves the order unfilled and the position exposed.
• Market-if-Touched (MIT) order: rests until price touches its trigger, then becomes a market order, just like a plain stop. Guarantees a fill once touched, not the exact price.

Where Is Each Order Placed, and What Does It Guarantee?

An MIT sits on the opposite side of the market from a stop, and it exists for the opposite reason: a stop is a defensive tripwire, an MIT reaches for a favorable entry or a profit exit.

• A buy stop protects a short (buy to cover) or catches an upside breakout; a sell stop protects a long, the classic stop-loss, or catches a downside breakdown.
• A buy MIT (below the market) seeks a better entry, a bargain buy; a sell MIT (above the market) seeks a better exit, selling into strength.

How Do Electronic Markets Match and Trigger Orders?

• Most futures now trade on electronic platforms, which have replaced most open-outcry pit trading.
• Resting bids and offers collect in a central limit order book (CLOB) and match by price-time priority: best price first, then earliest time among orders at the same price. Size does not jump the queue.
• A native stop is held and triggered by the exchange's own match engine. A synthetic stop is held and monitored by the broker, which submits the order only once its own systems see the trigger. Placement and the becomes-a-market-order mechanics are identical either way; only who does the triggering changes.

Which Gotchas Trip Students Up?

• The signature trap: a buy order below the market is a buy MIT (buy the dip); a sell order below the market is a sell stop (stop-loss on a long). Same location, opposite order name and opposite intent.
• A market order guarantees a fill, not a price, even with protection attached. An answer claiming a market order "locks in" a price is wrong.
• A stop-limit trades a guaranteed price for the risk of no fill, the opposite trade-off from a plain stop. Placement (buy above, sell below) is identical to a plain stop; only what it becomes after the trigger changes.
• Price-time priority means best price first, then earliest time, not biggest order first.

One-Breath Recap

A market order fills immediately at the best price, guaranteeing execution, not price; a plain stop rests until triggered and then becomes a market order (fill, not price, since a buy stop sits above the market and a sell stop sits below), while a stop-limit uses the same placement but becomes a limit order instead, guaranteeing a price or better at the risk of no fill if the market gaps past it; a Market-if-Touched order mirrors the stop, resting on the opposite side of the market (buy below to catch a dip, sell above to catch a rally) and becoming a market order once touched; and on electronic markets, orders match in a central limit order book by price-time priority, with a stop triggered either natively by the exchange or synthetically by the broker.

Need more than the recap? Read the full Basic Order Types unit.