Market OrderA market order is the simplest of the order types. A market order is an order to buy or sell at the best available current price. As long as there are many sellers and buyers, a market order will be filled immediately. Once the order is placed, the customer has no control over the price at which the transaction is executed. The broker is required find the best price available at that time. In fast-moving markets, the price you actually buy or sell at may be different from the last price quoted before your order was entered.
Limit Order
A limit order is an order placed to buy or sell at an exact price for a certain length of time e.g. GTC where the limit order is Good Till Cancelled. For example, if the EUR/USD is currently trading at 1.2582 and you want to Buy when the price reaches 1.2600. You can either sit in front of your computer and wait for it to reach 1.2600 (at which point you would enter a buy market order), or you can place a Buy Limit Order at 1.2600 now. If you walk away from your computer to make a cup of coffee and the price goes up to 1.2600, your trading platform will automatically execute a buy order at that limit price.
Stop Order
A stop order is a limit order linked to an open or live trade for the purpose of preventing uncontrolled losses if the price goes the wrong way. These orders are commonly referred to a Stop Loss orders. A Stop Loss order remains in effect until the position is exited or you cancel the Stop Loss order.
Both Limit and Stop Loss orders are extremely useful if you don’t want to sit in front of your computer continuously throughout the 9 - 12:00am session, they are a form of insurance so that you don't miss the Target or Stop in fast moving markets and they help enforce good trading practice: you should never place a trade if you don't know when to take profits or stop losses.
Trade Entry and Exit
To Enter a trade, you can either Buy or Sell using a Market Order which will get you into the trade immediately at the best available current price. Or you could enter a Limit Order to specify the exact price you want to pay. But the risk here is that when prices are moving quickly, a limit order may not get executed and you will have to quickly type in Market order and hope you get a decent execution price when your order is confirmed.
To Exit a trade, either at a Target price or a Stop price, again you can use a Market Order once the price level is reached but this requires you to be sat continuously in fron of your computer 9 - 12:00. Or you can place 2 Limit Orders (one for the Target and one for the Stop) so that if there is a sudden burst of price movement, your limit orders will get executed and you won't be left desperately trying to type in market orders for several trades.
