# Market, Limit and Stop Orders Explained · DT Academy > Market, limit and stop orders explained: when each one fills, what the spread costs, and how a stop loss and take profit protect a trade. [Back to The DT Intensive](https://www.thedtterminal.com/academy/courses/dt-intensive) Day 3Types of orders Chapters done # Types of orders Day 03 of 26 · 9 min read · By DT Terminal An order tells your broker what to do and at what price. A market order fills now at the best price available, a limit order waits for a better price, and a stop order waits for price to break through a level. This lesson shows when each one fills and how stop loss and take profit protect a position. Unlock the full lesson in the app Worked examples, the quiz and the interactive tools are in the app. Free account. [Continue in the app, free](https://www.thedtterminal.com/login?signup=true&redirect=%2Fjournal%2Facademy%2Ftypes-of-orders) Chapter 1 of 7 ## Market orders An **order** tells your broker to buy or sell, how much, and at what price. Every order type answers one question: when should this fill? A **market order** answers "now": it fills straight away at the best price on offer. You are sure to get in, but not of the exact price. In a fast market, around news or a session open, the fill can be a little worse. That difference is **slippage**. The other four types are **pending orders**. They wait at a price you choose. If price never reaches them, **they never fill and cost nothing**. Pick the order: one question, four answers Market orders fill now. The four pending orders wait at a price you choose: **limit** when that price is better than now, **stop** when you only want in on a break. Chapter 2 of 7 ## Bid, ask and the spread There are always two prices. The **ask** is what you pay to buy. The **bid** is what you get to sell. The gap is the **spread**, so **every trade opens slightly negative**. Spread the cost of getting in Gap drawn larger than real life so you can see it. **Buy orders fill at the ask, sell orders fill at the bid.** A buy limit or buy stop triggers when the ask reaches its price. A sell limit or sell stop triggers when the bid does. **Your chart shows the bid.** MT5 draws candles from the bid. **A short closes at the ask**, a spread above every candle. **Go deeper** On `EURUSD` the spread is often under 1.5 pips on a standard account. It widens around big news releases and **at the daily rollover, 17:00 New York time**, when fewer participants are quoting. A long closes by selling, at the bid, so the chart shows exactly what closes it. A short closes by buying, at the ask. The last worked example shows what that can do to a short's stop. Chapter 3 of 7 ## The four pending orders Two choices make every pending order: **buy or sell**, and a price **above or below** the market now. Two times two gives four orders. Pending orders EURUSD, waiting above and below the price [Replay in the app](https://www.thedtterminal.com/login?signup=true&redirect=%2Fjournal%2Facademy%2Ftypes-of-orders%3Fsection%3Dpending-orders%23pending-orders) The orders sit 15 and 30 pips from the bid. Buy orders trigger on the ask, sell orders on the bid. | Order | Where it sits | It fills when | Use it when | | --- | --- | --- | --- | | Market buy or sell | Fills now at the current price | Immediately: a buy at the ask, a sell at the bid | You want in immediately | | Buy limit | Below the current price | The ask falls to it | You want to buy a pullback into a level | | Sell limit | Above the current price | The bid rises to it | You want to sell a rally into a level | | Buy stop | Above the current price | The ask rises to it | You only want to buy if price breaks up through a level | | Sell stop | Below the current price | The bid falls to it | You only want to sell if price breaks down through a level | **Limit means at a better price. Stop means only if it breaks.** A buy limit **buys cheaper than now**. A buy stop **pays more**, to see the level break. Flip both for sells. Interactive tool ### Order picker This interactive tool runs in the app, with your own numbers. [Continue in the app, free](https://www.thedtterminal.com/login?signup=true&redirect=%2Fjournal%2Facademy%2Ftypes-of-orders%3Fsection%3Dpending-orders%23pending-orders) Free account Place all four in the backtester Pause a backtest on `EURUSD`, set one of each around the price, and play forward to see which fills first. **Go deeper** A buy limit waits for price to come down to you. A buy stop waits for price to go up through a level. A sell limit sells higher than now, and a sell stop sells only once price breaks lower. Once it triggers, **a stop order becomes a market order**, so in a fast break it can fill a little past your price. A limit order **fills at your price or better**, but price can turn just before it and leave you out of the trade. MT5 also offers buy stop limit and sell stop limit orders: a stop that places a limit order once it triggers. You can leave them alone while you learn the four above. The backtester takes the same four pending orders as MT5, so the habit carries over. Chapter 4 of 7 ## Stop loss and take profit A **stop loss** and a **take profit** close a position you hold: the stop where your idea is proven wrong, the target where you planned to get paid. They are **pending orders, pointing the other way**: Long EURUSD · stop 20 pips · target 40 pips [Replay in the app](https://www.thedtterminal.com/login?signup=true&redirect=%2Fjournal%2Facademy%2Ftypes-of-orders%3Fsection%3Dstop-loss-take-profit%23stop-loss-take-profit) The buy limit fills on the pullback. From then on the stop loss and take profit wait on either side, and whichever the bid reaches first closes the trade. | Position | Stop loss | Take profit | Closes at | | --- | --- | --- | --- | | Long | Below entry (a sell stop) | Above entry (a sell limit) | The bid | | Short | Above entry (a buy stop) | Below entry (a buy limit) | The ask | **A stop loss is not a guaranteed price.** If the market gaps past it, it fills at the first price available. DT Terminal Charts EURUSD · H1 Example 01 on a chart. The buy limit waits under the price until the pullback fills it. The stop loss is a sell stop below, the take profit a sell limit above, and the backtester draws them the same way. Write it down as a rule Add "Every trade has a stop loss and a take profit before I place it" to Trading Rules and mark it critical. **Go deeper** On a long, the stop is a sell stop below entry and the target a sell limit above. On a short, the stop is a buy stop above and the target a buy limit below. In MT5 you can type both into the New Order window (`F9`) before you place the trade, and drag them on the chart afterwards. A gap past the stop happens **over a weekend or on a big release**, and the fill can be worse than where you set it. When you write up a trading day in the journal, you can name the rule you broke, so a trade placed without its stop is counted rather than forgotten. Chapter 5 of 7 ## Worked example: a buy limit Round numbers so the arithmetic is easy to follow. Not trade ideas. Worked example ### Example 01: Buying a pullback on EURUSD with a buy limit The worked example, with every number walked through, is in the app. [Continue in the app, free](https://www.thedtterminal.com/login?signup=true&redirect=%2Fjournal%2Facademy%2Ftypes-of-orders%3Fsection%3Dworked-examples%23worked-examples) Free account **Go deeper** When the order is placed, EURUSD trades at 1.08720 bid, 1.08732 ask. Stop loss 1.08300, take profit 1.08900, size 0.10 lots, where each pip is worth $10 per lot. Once filled, the stop and target **close the long at the bid**. This is the trade drawn in the stop loss figure in the previous chapter. Chapter 6 of 7 ## Worked example: a sell stop Worked example ### Example 02: Selling a breakdown on XAUUSD with a sell stop The worked example, with every number walked through, is in the app. [Continue in the app, free](https://www.thedtterminal.com/login?signup=true&redirect=%2Fjournal%2Facademy%2Ftypes-of-orders%3Fsection%3Dsell-stop-example%23sell-stop-example) Free account **Go deeper** Gold has bounced off support at 3,340.00 three times and trades at 3,352.40 bid, 3,352.70 ask, a $0.30 spread. **A touch of the level is not enough** to trigger the order. Stop loss 3,346.00, take profit 3,322.00, size 0.10 lots. On a 100 ounce contract that is $10 for every $1 gold moves. A fill lower than the order price is worse for a sell. **Contract sizes vary by broker**, so check the symbol's specification in MT5 before you size a gold trade. Chapter 7 of 7 ## Worked example: a short stopped by the ask Worked example ### Example 03: A short stopped out by the ask The worked example, with every number walked through, is in the app. [Continue in the app, free](https://www.thedtterminal.com/login?signup=true&redirect=%2Fjournal%2Facademy%2Ftypes-of-orders%3Fsection%3Dstopped-by-the-ask%23stopped-by-the-ask) Free account Short stopped out by the ask [Replay in the app](https://www.thedtterminal.com/login?signup=true&redirect=%2Fjournal%2Facademy%2Ftypes-of-orders%3Fsection%3Dstopped-by-the-ask%23stopped-by-the-ask) Spread drawn to scale for this moment: 6 pips, against a normal 1. **Switch on the ask line** (`F8` in MT5), and **give a short's stop some room** above the level for a wider spread. **Go deeper** You are short EURUSD from 1.08500 with a stop loss at 1.08600, 10 pips above, on 0.10 lots. The highest bid candle on your chart reaches 1.08540. The loss is the 10 pips you planned for. It just arrived from a chart that looked safe. The ask line is in your chart's properties. With it on, you can see the price a short closes at. Quick review ## Check yourself Quick review · 0 of 0 [All lessons in The DT Intensive](https://www.thedtterminal.com/academy/courses/dt-intensive) [Previous](https://www.thedtterminal.com/academy/how-to-read-candlesticks) ## How to read candlesticks Day 02 · 7 min read [Next in Learn to trade](https://www.thedtterminal.com/academy/how-to-choose-your-risk) ## How to choose your risk Day 04 · 8 min read ## Try it on your own account Connect a broker and DT Terminal verifies every trade against it. Free to start. [Start free](https://www.thedtterminal.com/login?signup=true&from=academy&entry=closing_card&redirect=%2Fjournal%2Facademy) [Back to DT Academy](https://www.thedtterminal.com/academy) DT Academy is education, not financial advice. Nothing here is a recommendation to buy or sell any instrument. 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