Order types in practice

You already know market and limit orders. The third primitive is the stop order, which does the opposite of a limit: it triggers once price passes through a level, and then executes as a market order. A buy stop sits above the current price; a sell stop sits below. That is how a stop loss closes a losing long, and it is also how breakout traders enter as a level gives way.

Because a triggered stop becomes a market order, it inherits the market order's weakness: slippage. In a violent move your stop can fill several pips beyond the level you set. This is normal and is not your broker cheating you — there was simply nobody willing to trade at your price. It is also the reason a stop is a risk-control tool rather than a risk-elimination tool.

Some platforms offer a stop-limit, which triggers at one price but will not fill worse than a second. It protects against slippage at the cost of possibly not being filled at all — which, on a stop loss, is exactly the wrong trade-off. Use stop-limits for entries if you like; keep protective exits as plain stops.

Bracketing an entry turns an emotional decision made later into an arithmetic decision made now, while you still have no money on the line.

The bracket, often labelled OCO (one cancels the other), attaches a stop loss and a take profit to a position so that filling one cancels the other. Placing the bracket at the same moment you enter is one of the highest-value habits in trading: it turns an emotional decision made later into an arithmetic decision made now, while you are calm and have no money on the line.

Finally, know your platform's expiry settings. A good-til-cancelled order can sit for weeks and surprise you during a news week you had forgotten. A day order dies quietly at the session close. Neither is wrong, but an order you have forgotten is an unmanaged risk.