Market, limit, stop and stop limit orders: what does it all mean?
Financial Interest was founded by Damien Talks Money (389,000 YouTube subscribers) to teach the personal finance lessons he wished he'd been taught at school.
Last updated 25th February 2026
14 min read
- A market order buys or sells immediately at the best available price during trading hours
- A limit order only buys or sells if you get the price you want
- A stop order automatically buys or sells if the price hits your chosen trigger point
- A stop limit order only buys or sells if your trigger price is hit and you still get the price you’ve set
- Some brokers don’t offer different order types, while others do but call them different names.
Financial Interest provides guidance, not advice. If you’re unsure about anything, speak with a qualified adviser. When investing, your capital is always at risk. Past performance does not guarantee future results.
Placing a trade can feel a bit like using one of those car park payment machines – you’re faced with a screen full of options, a nagging sense of dread, and a fear you’ll accidentally spend your entire month's salary when you just wanted to get in and out as quickly and cheaply as possible.
Luckily, market orders aren’t as complicated as trying to work out how to use Apple Pay at a machine that was last updated in 2007. They're just different ways to tell your broker how (and when) you want your trade to go through.
Here’s what each order type actually does, when it matters, and why you might not even need them after all.
A quick note before we dive in: Some brokers don't even offer these features because their platforms are designed for long-term investing. Others give you a more limited range, or call them something completely different just to keep things interesting. If you’re ever unsure about how an order type works, it’s best to give it a miss or check your broker’s help section first.
Right, now let's get on with it.
A market order is the classic way to buy or sell an asset right now, and is the default option for trading platforms. This means your trade will go through as a market order unless you specify otherwise.
It just means you’re telling your broker to buy or sell as quickly as possible at the best available price.
It’s the trading equivalent of that “shut up and take my money!” meme – you’re not waiting around or haggling. You just want in, right now.
For most assets, you’ll get more or less the price shown on screen. However, market orders have to follow priority guidelines, meaning your order has to get to the back of the queue behind everyone who already placed the same order. This can lead to price changes for large orders, but normally isn’t a big issue for most retail investors.
That said, there are a few exceptions.
If you’re buying particularly volatile stocks (which we wouldn't recommend), prices can move faster than you’d think. In these cases, even a split-second delay is enough for your order to fill at a totally different price than the one you saw.
With penny stocks (stocks that often trade at less than $5 per share), it doesn’t take much: if a $1 stock jumps by 50 cents while your order is going through, that’s a 50% price swing, just like that. It’s not unusual for news, hype, or just a flurry of traders to send these prices bouncing all over the place.
Why timing (sometimes) matters
If you place a market order outside of regular trading hours, prices have more time to fluctuate.
Let’s say you put in an order for some Greggs shares at 6pm on a Friday night. That’s 62 hours before the London Stock Exchange opens again at 8am on Monday morning.
In that window, all sorts of things can happen – rumours they’re scrapping the cheese and onion bake or finally caving in and bringing back the roast chicken salad roll – that could change the share price.
When the market finally opens, your order goes through at whatever the new price is, not the one you saw on Friday night.
There's also something interesting called the "weekend effect", where prices on Monday mornings often open a bit lower than they closed on Friday. Nobody’s quite sure why (maybe we're just all a bit less optimistic on a Monday morning), but it’s a reminder that even if nothing dramatic happens, prices don’t always pick up where they left off.
With index funds, though, this is usually less of an issue, because you’re buying a whole basket of shares instead of just from one particular company.
Even if something major happens, chances are the move will be much smaller and steadier than with a single stock (barring alien invasions or a major market meltdown, in which case you’ve probably got bigger problems anyway).
We’ve also delved into this whole topic over on our YouTube channel, so if you’re more of a visual learner (or just want to see someone else pressing the buttons first), check out the video below:
How to set a market order
Making a market order is really straightforward, as it'll just be the default option in whatever trading platform you're using. As we mentioned earlier, some platforms might call it something different – for example, Freetrade calls it an "instant order".
All you need to do is confirm how much you want to buy of a particular fund, confirm your order, and you're all set – no faffing required.
A limit order lets you set the exact price you want to buy or sell at – no more, no less.
They're great for patient investors who’d rather miss out than overpay, or for anyone who doesn’t fancy watching the ticker all day and really has to get a load of washing on and get the kids to football practice.
Buying with a limit order
You’d use a limit order if you want to buy shares in a company or fund but you’re not quite happy with the price it’s currently at.
Instead of settling for whatever the market’s serving up, you set your own target – “I’ll buy, but only if it drops to £X, thank you very much.”
If the price hits your chosen level (or better), your order goes through automatically. If not, nothing happens and your cash stays put.
Selling with a limit order
With selling, it works in much the same way. You set a minimum price you’re willing to accept, so if the market rises to meet you, your shares are sold at your preferred price (or higher).
Just be aware: if the price never hits your limit, your trade simply doesn’t happen. Sometimes that’s a blessing; sometimes it’s annoying.
Partial fills and fragmented orders
If the share price bounces above and below your set price, your limit order might not all get filled at once.
Imagine you want to sell 100 shares at £10, but there are only buyers for 30 shares when the price first hits your limit. Your broker will sell those 30 straight away, but the rest of your order will wait until more buyers show up at £10. This could leave you with a handful of separate trades at the same price, or even small amounts left unsold if the price moves away again.
This sort of “fragmented fill” is usually more common with less popular, low-priced stocks. For big, liquid shares, your whole order will usually go through in one go because there are loads of buyers and sellers at any given time, so it’s rarely something to worry about.
How to set a limit order
You'll find the option to place a limit order right where you'd normally place a market order. Whichever broker you're using, setting the order will involve setting the price you're willing to buy (or sell) per share, and how much you actually want to spend.
Some brokers let you do this all in one go, with others, it's a two-step process.
Either way, all you'll need to do is review your order, confirm, and wait for the price to hit your target (if it ever does). Some brokers will also give you the option to let the price expire at the end of the day.
In the example below, we'd be buying two shares of the Invesco FTSE All-World ETF, currently priced at £6 per share, but we only want to buy it if the share price dips to £4 per share:
A stop order tells your broker to jump into action only if the price reaches a level you’ve chosen. When that happens, your order turns into a market order which means it’ll buy or sell as soon as possible, at whatever price is available.
You don’t get to pick the exact price. If the market is moving fast, you could end up trading for more or less than you expected.
Selling with a stop order
Most investors use a stop order to limit losses. If your shares fall to the stop price you’ve set, your broker will sell them as soon as possible at the best available price. You don’t have to watch the market all day, and if things start to slide, your shares are sold automatically to help protect you from bigger losses.
Buying with a stop order
You can also use a stop order the other way around – to buy only if a share price rises to your chosen level, which is handy if you’ve got a good feeling about a certain stock or fund and want to benefit from a price rise.
For example, if you want to buy a stock currently trading at £50, but you only want to buy it if it goes above £55, you’d enter an order with a stop price of £55. Consider it the "I'll believe it when I see it" button.
How to set a stop order
As we've covered, whether you're buying or selling with a stop order, the process is pretty much the same either way – just in reverse.
If your broker offers a stop option, it'll be available right next to all the other market order types.
You'll need to input the total number of shares you want to buy or sell, then set your stop price – the trigger point where you want your order to activate.
After that, just review your details and confirm the order. If the share price hits your chosen stop level, your broker will automatically place your buy or sell order at the next available market price. If it doesn’t, nothing happens, and your order just sits there waiting.
In the example below, we'd be selling 50 shares of Invesco FTSE All-World, with a current share price of 596.4p (£5.96). But, we only want to sell it if the price drops to 580p (£5.80) per share:
A stop limit order – as the name suggests – is basically a combination of a stop and a limit order. You set the maximum price you’re willing to pay (or the minimum you’re willing to accept), and the trigger price you want your order to kick in at. If both conditions are met, your trade goes through.
Buying with a stop limit order
Say you’re interested in buying a share that’s been bouncing around a lot. You think, “If it breaks above £20, it could be on the way up, but I don’t want to pay over the odds.”
You set your stop price at £20, and your limit price at £18. The order only kicks in if the share price climbs to £20, but then it will only buy if it can do so at £18 or less.
It’s basically a way of catching a rising trend, while still keeping a tight grip on how much you’re willing to pay.
Selling with a stop limit order
It’s the same logic when selling. Maybe you own a share that’s trading at £52, and you want to protect yourself if it starts falling, but you also don’t want to panic sell too low.
You could set a stop price at £50, and a limit at £48. If the price drops to £50, your shares are offered for sale, but the order will only complete if someone’s willing to pay £48 or more.
Mind the gap
Sometimes, when a stock or fund is changing in price too quickly, it results in what’s known as a “market gap”.
This usually happens after earnings reports, during market openings, or if investors have access to after-hours trading and can act on news updates about the stock before the market re-opens (say, if Gregg’s really did scrap the cheese and onion bake).
If this happens, you’ll see a gap on the graph, and if you’ve set your stop or limit order value in the range of this gap, it’s possible that the trade won't be completed – a blessing or a curse depending on how the market moves next.
How to set up a stop limit order
Remember, not every broker will offer stop limit orders. Trading 212 does, Interactive Brokers (IBKR) does, Vanguard does for certain assets, and a few other brokers do too. If your broker does offer it, it'll just be right there with all the other market order types.
When you’re buying, you set a stop price above the current market price – this is the point where your order will be triggered if the price rises. You also set a limit price, which is the maximum you’re willing to pay.
When you’re selling, you do the opposite. You set a stop price below the current market price, so if the price falls to your stop level, your shares are offered for sale. The limit price is the minimum you’re willing to accept.
In the example below, we want to finally bag some shares in Greggs. The current share price is 1,555p (£15.55). We'll set a stop at 1,600p (£16) and a limit at 1,650p (£16.50). If the price climbs to 1,600p (£16) or higher, our order will trigger – but it’ll only go through if we can buy at 1,650p (£16.50) or less. If the price shoots straight past 1,650p (£16.50), nothing happens.
A word of caution for long-term investors
While fancy buy/sell order types can be useful for individual stocks, they don’t make much sense for broad index funds or long-term investing.
Index funds, by their very nature, are designed to ride out the ups and downs of the whole market. Unlike an individual company, an index fund can’t go bust overnight. The only time you'll see dramatic, sudden drops in the whole market is during a panic – which is often the worst possible time to sell. Setting stop orders on a global index fund, for example, can mean accidentally selling low during a temporary wobble, and then missing out when the market recovers (which, historically, it always has).
So if you’re a long-term investor, you’re might be better off ignoring these tools altogether, and focusing on staying the course – come rain, shine, or yet another surprise budget announcement.
The bottom line
Market, limit, stop, and stop limit orders might sound fancy, but all they really do is give you different ways to control how your trades go through. A market order gets your trade done as quickly as possible at whatever the current price is. A limit order lets you set your own price, so your trade only happens if you get the deal you want. A stop order acts as your safety net, automatically kicking in if the price hits your chosen trigger. And a stop limit order is the picky one, only going through if your trigger price is reached and you still get the price you’ve set. For most people, keeping it simple works best – but at least now, if anyone asks, you can confidently explain why you’re not fussing with all the extra buttons (and maybe talk them out of overcomplicating things too).
Financial Interest provides guidance, not advice. If you’re unsure about anything, speak with a qualified adviser. When investing, your capital is always at risk. Past performance does not guarantee future results.
