Stock Trading Order Types Explained: Market, Limit, Stop Loss, OCO & Bracket Orders

by Prodigy Team January 15, 2026

Stock Trading Order Types Explained: Market, Limit, Stop, OCO, Brackets & The Best Orders for Each Strategy

If you’re serious about trading, learning order types is non-negotiable. Your strategy can be perfect — but the wrong order type can cause slippage, missed fills, bad risk, and unnecessary stop-outs.

This guide breaks down every major order type in plain English, with examples, real outcomes, and the best combinations for different trading strategies. By the end, you’ll know exactly what order to use for breakouts, pullbacks, trend trades, small caps, and options.

Why Order Types Matter More Than Most Traders Think

Order types control three things:

Execution: Will you get filled?
Price: What price do you actually get?
Risk: How you exit when you’re wrong (or right)

Many traders lose money simply from poor execution — chasing with market orders in thin stocks, placing stops in obvious areas, or using stop-limits that never fill.

Before you go further, it helps to understand structure and support because many order types depend on it:

1) Market Order

A market order buys or sells immediately at the best available price. It prioritizes speed over price.

When to Use It

Highly liquid large caps (tight spreads)
When you absolutely must get filled
Fast-moving exits (risk control)

Example

You place a market buy on a $50 stock. The best ask is $50.02, so you get filled there. But in a fast move, the ask may jump to $50.20 and you still get filled — that’s slippage.

Best Result

Instant fill.

Worst Result

You get a terrible fill due to wide spreads or a fast spike (common in small caps).

Pro Tip: In small caps, market orders can be expensive because spreads widen when volatility hits.

2) Limit Order

A limit order fills at your price (or better). It prioritizes price over speed.

When to Use It

Entries at support
Pullback buys
Scaling into positions
Taking profits at targets

Example

Stock is at $10.00. You place a buy limit at $9.85 (pullback support). If price touches $9.85 and there’s enough liquidity, you get filled. If price only hits $9.86 and bounces, you may miss the trade.

Best Result

Cleaner entry price, less emotion, tighter risk planning.

Worst Result

No fill (missed trade).

Best paired with: Pullback strategies and support trading.

3) Stop Order (Stop Market)

A stop market becomes a market order after a stop price is hit. It’s commonly used for stop losses and breakout entries.

Two Common Uses

A) Stop Loss

You buy at $10.00 and set a stop market at $9.50. If price hits $9.50, your order triggers and sells at the best available price (may slip).

B) Breakout Entry

Stock is at $9.80, resistance is $10.00. You set a buy stop market at $10.05. If price breaks above $10.05, you get filled immediately (but can chase into a spike).

Pro Tip: Stop markets are reliable for exits (risk), but can slip on entries in fast breakouts.

4) Stop-Limit Order

A stop-limit triggers at a stop price, then submits a limit order. It gives price control but risks not filling.

When to Use It

Controlled entries in liquid markets
When slippage would be unacceptable

Example

Stock is $10.00. You place a stop at $9.50 with a limit at $9.45. If it gaps down quickly past $9.45, you may not get filled at all — and you’re stuck in the trade.

Important: Stop-limit is often dangerous for stop losses in volatile small caps because it may not execute.

5) Trailing Stop (Market)

A trailing stop moves with price by a fixed amount or percentage. It protects gains while letting winners run.

Example

You buy at $10.00. Price runs to $12.00. You set a trailing stop of $0.50. If price pulls back $0.50 from the peak, it triggers a market sell.

Best Use

Trend trades
Momentum runners
When you want automation while holding

Pro Tip: Trailing stops work best when volatility is stable. In choppy markets, they can stop you out early.

6) Trailing Stop-Limit

This is a trailing stop that turns into a limit order. More control, but again risks not filling.

Best for: Liquid large caps, not thin small caps.

7) Market-on-Open (MOO) & 8) Limit-on-Open (LOO)

These execute at the open. MOO guarantees execution, LOO controls price.

When to Use

Position traders entering planned long-term names
Not ideal for small-cap open volatility unless you’re experienced

Warning: The open is often the most volatile time of day.

9) Market-on-Close (MOC) & 10) Limit-on-Close (LOC)

These execute near the close. Used for end-of-day positioning and institutional-style execution.

Best for: Swing traders who want close-based entries/exits and cleaner confirmations.

11) OCO (One-Cancels-the-Other)

An OCO is two orders linked together. If one fills, the other cancels. This is how pros manage trades without babysitting every second.

Example

You buy at $10.00. You set:

Take profit limit: $11.00
Stop market: $9.50

If price hits $11.00, your take profit fills and the stop cancels. If price hits $9.50, your stop fills and the profit order cancels.

This is elite trade management.

12) Bracket Orders (Entry + Stop + Target)

A bracket order is a packaged trade: you enter, and your stop + profit target are automatically attached.

Best For

Beginners learning discipline
Traders who struggle with emotional exits
Breakout and pullback systems

This pairs extremely well with structure-based stop placement:

Stop Loss Strategy (Percentage vs Chart-Based Stops)

13) Time-in-Force: Day, GTC, IOC, FOK

Day Order

Expires at market close.

GTC (Good-Til-Canceled)

Stays active until filled or canceled. Useful for swing entries at support.

IOC (Immediate-or-Cancel)

Tries to fill immediately; remaining shares cancel.

FOK (Fill-or-Kill)

Must fill completely at once or cancels. More institutional style.

14) Options Order Types (Stock & Options Traders Must Know)

Buy to Open: Enter a new long options position
Sell to Close: Exit a long options position
Sell to Open: Sell options to open a short position (advanced)
Buy to Close: Exit a short options position

If you trade options, execution matters even more due to spreads and liquidity:

Options Trading Explained: Calls, Puts & Strategies

The Best Order Types for Different Trading Strategies

Breakout Trading

Entry: Stop Market (fast fill) or Stop-Limit (controlled)
Exit: OCO with stop + target

Pair this with volume confirmation: Volume Strategy for Breakouts

Pullback / Dip Buying

Entry: Limit orders at support
Stop: Stop Market below structure
Profit: Limit orders at targets

Pullback Trading Strategy Guide

Trend Trading

Entry: Limit on pullback or breakout confirmation
Exit: Trailing Stop (Market) to hold winners longer

Trend Trading Strategy 2026

Small Caps (Fast & Volatile)

Avoid market orders on entries (spreads can destroy you)
Prefer limits for entries and stop markets for exits
Use brackets to reduce emotional mistakes

Large Caps (Liquid & Cleaner)

Market orders are safer (tight spreads)
Stop-limit can work more reliably
OCO/brackets are ideal for automation

Final Thoughts: Execution Is a Strategy

A perfect entry with the wrong order type is still a bad trade. The best traders treat order selection as part of the strategy — not an afterthought.

If you master order types, you’ll reduce slippage, improve fills, and manage trades like a pro.

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Disclaimer

Disclaimer: All information is for educational purposes only and is not financial advice. Trading involves risk, and you should always do your own due diligence and use proper risk management.