Welcome to Basic Order Types, the unit that teaches how a trader tells the market exactly how and when to fill an order. Every order type here is defined by just two things the exam tests relentlessly: where it sits relative to the current price (above or below), and what it becomes when the price reaches its trigger (a market order or a limit order). Get those two facts right and the questions become reasoning, not memorization.
Exam Weight: Part 1 spans ~71% of the exam across Chapters 1-7 combined; the National Futures Association (NFA) does not publish per-unit weights.
Video Resources
What You'll Learn
In this unit, you'll cover:
- Market Orders: An order that fills right away at the best available price, guaranteeing a fill but not a price, and why slippage happens in thin or fast markets
- Stop Orders: A dormant order that becomes a market order once the price trades through its trigger, why a buy stop sits above the market and a sell stop sits below, and what each one protects
- Stop-Limit Orders: The same placement as a plain stop but becoming a limit order, which flips the trade-off to guaranteeing a price (or better) at the risk of no fill at all
- Market-if-Touched (MIT) Orders: The mirror image of a stop (buy below the market, sell above it), why the intent is a favorable entry or a profit exit, and how it becomes a market order once touched
- Orders on Electronic Markets: How electronic platforms and a central limit order book match trades by price-time priority, and how a native stop held by the exchange differs from a synthetic stop simulated by the broker
Why This Matters
Series 3 candidates place and manage orders for clients whose positions can be pinned by a fast market, so knowing what each order guarantees (and what it does not) is core to explaining risk. Two ideas run through the whole unit:
- A plain stop and an MIT both become market orders, so they guarantee a fill but not a price
- A stop-limit becomes a limit order, so it guarantees a price (or better) but risks no fill at all
Watch one signature trap the whole way through: a buy order below the market is a buy MIT (a favorable entry), while a sell order below the market is a sell stop (a stop-loss on a long). Same location, opposite order name and opposite intent.
Let's start with the simplest order of all: the market order.