An order chooses an execution instruction. It cannot promise both an immediate fill and an exact price.
Market and limit orders answer different questions
A market order asks to trade at the available market price. The last traded price on a chart is historical information; the available quotes and depth may have changed. A large order can fill at several prices, and trading halts or other restrictions can interrupt execution.
A buy limit sets the highest price you are willing to pay; a sell limit sets the lowest price you are willing to accept. The instruction controls the price if execution occurs, but a fill is not guaranteed. Orders ahead in the queue and available volume also matter.
A stop is a trigger
A conventional stop order becomes a market order after its trigger is reached. The execution price can be much worse than the stop during a gap or fast move. That makes the distance to a stop useful for an illustration of planned risk, but not a guaranteed limit on loss.
A stop-limit order becomes a limit order after triggering. Its price condition may leave you with no execution at all. Broker rules can differ over trigger prices, trading sessions and eligible instruments. Check the actual order instructions and expiry settings rather than assuming every platform behaves identically.
Separate spread from slippage
The bid is a quoted buying price and the ask is a quoted selling price. Their difference is the spread. Slippage compares an intended or reference execution price with the price actually obtained. Record which reference you used so that the comparison means something.
Suppose a hypothetical buy was planned at £25.10 but filled at £25.25. For 100 shares, the difference is £15 before other charges. Do not also count the same price difference again under a second label. Commissions, currency conversion and taxes are separate items where applicable.
Practise the mechanics before interpreting results
In a simulator, compare orders around a quiet interval and a hypothetical gap. Note that simulated liquidity and fills can be more favourable than real execution. A profitable paper result does not demonstrate that the same order could have been filled live.
- Record the bid, ask, intended price and actual fill.
- Keep unfilled and partially filled orders in the review.
- Read session eligibility and cancellation rules before treating an order as protection.
Describe the two ways an exit can fail
For a hypothetical holding, write one scenario in which a stop-market order fills far below the trigger, and another in which a stop-limit triggers but remains unfilled. State the remaining exposure in each case.
Terms in this guide
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Educational notes, not personalised financial advice. Hypothetical examples and chart shapes are not performance claims or trading signals.