Forex Order Types Explained: Market, Limit and Stop
Forex order types explained: market, limit, stop, stop-limit and OCO orders, which price triggers each, and why stops can slip while limits may not fill.
You open the order ticket, choose a pair and a size, and the platform asks a question you may not know how to answer: market or pending, buy limit or buy stop? Each choice behaves differently, and the wrong one can mean a fill you did not expect, or no fill at all.
Quick answer: Forex order types fall into two groups. A market order buys or sells immediately at the current price. Pending orders wait for a level: a limit order waits for a better price (buy below, sell above), a stop order for confirmation (buy above, sell below). Stop losses and take profits are pending orders that close trades.
Forex order types at a glance
An order is an instruction to your broker: buy or sell this pair, this size, under these conditions. However many buttons your platform shows, every forex order type answers one of three questions.
- When do you want in? Right now, with a market order, or only if price reaches a level you choose, with a pending order.
- How do you want out? Automatically, with a stop loss below your idea and a take profit at your target.
- How long should the order live? Until you cancel it, until the end of the day, or until a date you set.
There are four basic pending orders, and they are easier to remember as a grid than as a list. A limit order waits for a better price than today’s: you buy below the market or sell above it. A stop order waits for the market to prove a move: you buy above the market or sell below it.
Buy stop and sell limit sit above the price, buy limit and sell stop below it. Tap through each order below to see it placed on a chart.
Fills immediately at the current ask (buying) or bid (selling). You get speed; you accept whatever the price is right now.
Market, limit, stop, stop-loss and take-profit orders placed around a current EUR/USD price of 1.0850. Illustrative prices. Tap each order type to see where it sits and when it fills.
Limits buy low and sell high; stops buy high and sell low. That sounds backwards for a stop, until you see that a stop’s job is to make sure the market has moved before you commit. The Academy lesson on order types has a short quiz to lock the grid in.
Market orders: speed first, price second
A market order says: fill me now, at the best price available. If you buy, you pay the ask, the higher of the two prices on the quote. If you sell, you receive the bid, the lower one. The gap between them is the spread, and you pay it on every market order the moment it fills.
What happens between your click and your fill depends on your account’s execution mode.
- Instant execution. The platform tries to fill you at exactly the price you saw. If the price has moved by the time the order arrives, the broker can either fill you at the new price (if it is within a tolerance you set) or send back a requote: a new price you can accept or refuse.
- Market execution. There is no price check. The order fills at the next available price, which in a calm market is usually within a fraction of a pip of what you saw, and in a fast market can be several pips away.
A requote protects your price but can cost you the trade in a fast market; market execution gets you in reliably but hands the price to the market. Why brokers differ here is covered in our guide to STP, ECN and dealing-desk execution.
Use a market order when being in or out matters more than the exact price. Closing a trade that has gone wrong is the obvious case. Entering EUR/USD during the London session is another, because the spread is tight and the next price is almost always the one you saw. Be wary around major data releases and the daily rollover, when spreads widen and the next price can be a long way from the last.
Limit orders vs stop orders: a better price or a confirmed move
Most trading ideas are conditional: “I will buy EUR/USD if it dips back to support at 1.0820.” Pending orders let the platform carry out that sentence while you are at work or asleep.
The four basic pending orders split into two philosophies.
Limit orders trade against the current move. A buy limit sits below the price and says: if the market falls to my level, buy. A sell limit sits above and says: if it rises to my level, sell. You are betting that a level will hold. A limit never fills at a worse price than the one you set, which makes it the natural tool for pullback trading.
Stop orders trade with the current move. A buy stop sits above the price and says: if the market rises to my level, buy. A sell stop sits below and says: if it falls to my level, sell. You are betting that a level will break, and you accept a worse price in return for evidence that the move has started. That makes stops the standard entry for breakout trading.
Each comes with a cost you should know before you choose it.
- The cost of a limit is missed trades and awkward timing. If price turns two pips short, you get nothing. When a buy limit does fill, it fills while price is falling towards you, which is sometimes the dip before the bounce and sometimes the start of a breakdown.
- The cost of a stop is price and false starts. You buy after the market has risen, often with some slippage, and some breakouts reverse as soon as they trigger.
The chart below puts both ideas on the same range. Step through it to see where each order goes and what happens to it.
Two ways to buy the same EUR/USD range. The buy limit sits just above support and fills on the dip; the buy stop sits above resistance and fills only once the breakout is under way, at a higher price. Illustrative prices.
Both orders worked here, at very different prices. In practice you would choose one, because they express opposite views of the same range. Our guide to support and resistance in forex covers drawing the levels pending orders hang on.
Which price triggers each order: bid or ask
Every order that buys is triggered by the ask, and every order that sells by the bid, for entries and exits alike. Most retail charts are drawn from the bid, so buy orders react to a price you cannot see unless you switch on the ask line.
| Order | It buys or sells | Triggered when |
|---|---|---|
| Buy limit | Buys | The ask falls to your price |
| Buy stop | Buys | The ask rises to your price |
| Sell limit | Sells | The bid rises to your price |
| Sell stop | Sells | The bid falls to your price |
| Stop loss or take profit on a long trade | Sells to close | The bid reaches it |
| Stop loss or take profit on a short trade | Buys to close | The ask reaches it |
Two consequences follow, and the diagram below shows both. A buy limit placed exactly on a low can be “touched” on your chart without filling, because the bid touched it while the ask stayed one spread above. A buy stop can fill while the candles still sit a pip below your level, because the ask got there first.
Sell orders behave as the chart suggests. On short trades, the stop loss is a buy order triggered by the ask, so a spread that widens at rollover can close you out while the chart never reaches your level. Our guide to the bid, ask and spread walks through that case, and the lesson on the bid-ask spread covers the basics.
Place buy limits a spread or two above the level you want, expect buy stops to trigger slightly early, and give short stops a buffer of at least the typical spread.
Stop loss and take profit orders: the orders that close trades
A stop loss closes a trade automatically at a set loss; a take profit closes it at a set gain. You can attach both in the same ticket as the entry, including on pending orders, where they become active only when the entry fills. They are the same pending orders from the grid, pointed the other way.
That explains their behaviour. A take profit is a limit order, so it never fills worse than your target. A stop loss is a stop order, so when it triggers it becomes a market order and fills at the next available price, which in a fast market can be beyond your level.
Even so, the stop loss is the most important order you will place: the only one that limits a loss when you are not watching. It belongs at the price that proves your idea wrong, and the distance to it sets your position size. Our guides on where to place a stop loss and position sizing cover both steps, and the Academy lesson on stop-loss placement turns them into a routine. If you later want the stop to follow a winning trade, that is a trailing stop loss.
With an entry, stop and target set, you know the shape of the trade before it opens. The visualiser below uses the worked example’s buy limit at 1.0820, stop at 1.0795 and target at 1.0870.
Break-even win rate = 1 ÷ (1 + R), where R is the reward-to-risk ratio. Costs push the real figure a little higher.
A 25-pip risk against a 50-pip reward is a 2:1 trade, which only needs to win about a third of the time to break even before costs. Change the target and watch that number move.
Slippage: why stops slip and limits may not fill
Slippage is the difference between the price you asked for and the price you got. It is why the choice between a stop and a limit matters.
- Market and stop orders are certain to fill, but not at a certain price. A stop order, once triggered, is sent as a market order. If the market is moving fast and there is nobody willing to trade at your level, it fills at the next price where someone is.
- Limit orders are certain of the price, but not certain to fill. A limit never fills worse than your level. If price jumps past it or touches it only briefly, you may get a partial fill or nothing.
Small slippage is normal, and with a fair broker it goes both ways. Large slippage clusters around high-impact releases, central bank decisions, the daily rollover and the weekend open. Send the same order in calm and fast conditions below.
Illustrative fills in calm and fast markets. Market and stop orders fill at the next available price, which during news can be several pips away; limit orders fill at your price or better, or not at all.
The extreme case is a gap: price closes on Friday at one level and opens on Monday at another. A stop loss inside the gap fills at the first price after the open. A limit order inside the same gap is the mirror image: it fills at your level or better.
How the better price on a limit is passed on varies from broker to broker, which is one reason regulators care about execution. Firms authorised by the UK’s Financial Conduct Authority must take all sufficient steps to get clients the best possible result when executing orders, and a broker that only ever slips against you is worth questioning. The Academy lesson on execution and slippage shows how to test a broker’s fills with a small live account, and our guide to slippage in forex goes further into why it happens.
Two habits help: size every trade as if the stop might slip a few pips, and avoid pending stop entries just before a major release unless you have planned for a worse fill.
Stop-limit orders, OCO orders, and GTC vs day orders
Three refinements come up on most platforms. None is essential on day one.
Stop-limit orders
A stop-limit order is a stop that turns into a limit order, not a market order, when it triggers. You set a trigger and a limit, the worst price you will accept. Once triggered, it fills only at the limit or better; if price has already run past the limit, it waits unfilled.
That caps slippage on a breakout entry: you get the breakout if it is orderly and stay out if it is a spike. Platforms differ, though. Some let you set the limit slightly beyond the trigger, as here; MT5’s buy stop limit puts the limit below the trigger, so it waits for a pullback after the breakout (see our MT4 vs MT5 comparison). Either way you trade certainty of fill for control of price.
OCO orders: one cancels the other
An OCO (one-cancels-the-other) order links two pending orders so that when one fills, the other is cancelled. The classic use is a buy stop above a range and a sell stop below it: whichever way it breaks, you are in, and the other order disappears.
Not every platform offers OCO for entries; where it is missing, you must cancel the second order yourself. A stop loss and take profit on the same trade already behave this way.
GTC, day and GTD orders: how long an order lives
Every pending order also has an expiry, set in the order ticket. The default on most forex platforms is good till cancelled.
| Expiry | What it means | When it suits |
|---|---|---|
| GTC (good till cancelled) | Stays live until it fills or you cancel it, including over weekends | Levels that stay valid for days, such as a weekly support zone |
| Day order | Cancelled automatically at the end of the broker’s trading day | Intraday setups that make no sense tomorrow |
| GTD (good till date) | Cancelled at a date and time you choose | Plans tied to an event, such as cancelling before a central bank decision |
On MT5 the choices are labelled GTC, Today, Specified and Specified day; on MT4 an order lives until cancelled unless you set an expiry time. The risk with GTC is forgetting: an order placed for last week’s chart can fill on next week’s news.
Placing a buy limit and a sell stop: a worked example
Here is how the pieces fit together on two real-looking trades in a $5,000 account, risking 1% each time. EUR/USD is worth about $10 per pip per standard lot, so $1 per pip for every 0.10 lots.
Allow a few pips of slippage when you size a stop entry. The position sizing lesson shows the calculation, and you can practise every order here on a demo, as the lesson on your first demo trade explains.
Common mistakes with forex order types
Putting a pending order on the wrong side of the price
A buy stop below the market or a buy limit above it is not valid, and most platforms reject it as an invalid price. Ask yourself: am I waiting for a better price (limit) or for confirmation (stop)?
Placing buy orders exactly on the level the chart shows
Your chart shows the bid; buy orders are triggered by the ask. A buy limit on the exact low can miss, and a short’s stop on the exact high can be hit by a widening spread.
Treating a stop loss as a fixed exit price
A stop loss caps your loss in normal conditions, but it becomes a market order when triggered. Through a gap or a news spike it can fill well beyond your level. Size positions so that a few pips of slippage does not break your risk rule.
Forgetting about good-till-cancelled orders
An old pending order is a trade taken without looking at today’s chart. Check your pending list before every session.
Opening a pending order without a stop loss attached
Pending orders often fill when you are away, exactly when an unprotected trade does the most damage. Attach the stop loss in the same ticket as the entry.
Choosing between forex order types is part of writing a trading plan you can follow.
Frequently asked questions
What are the main types of orders in forex?
The main forex order types are the market order, which fills immediately at the current price, and four pending orders: buy limit, sell limit, buy stop and sell stop. Stop loss and take profit orders close trades automatically. Many platforms also offer stop-limit orders, OCO links and expiry settings such as good till cancelled or day orders.
What is the difference between a limit order and a stop order?
A limit order waits for a better price than the current one: a buy limit sits below the market and a sell limit above it. A stop order waits for the market to confirm a move: a buy stop sits above the market and a sell stop below it. Limits never fill worse than your price; stops can slip.
Is a stop loss a market order or a limit order?
A stop loss is a stop order. It waits at your level, and when price reaches it the platform sends it as a market order to close the trade. That means it fills at the next available price, which is usually at or very near your level but can be worse during gaps and fast news.
Why did my buy limit not fill when price touched my level?
Most charts show the bid price, but a buy limit is triggered by the ask, which sits one spread higher. If the bid touched your level and bounced, the ask may never have reached it. Placing a buy limit a pip or two above the level you want allows for the spread.
What does GTC mean in forex?
GTC stands for good till cancelled. A GTC pending order stays live until it fills or you cancel it, including overnight and over weekends. It is the default on most platforms. The alternatives are day orders, which expire at the end of the trading day, and good till date orders, which expire at a time you choose.
What is an OCO order in forex?
OCO means one cancels the other. It links two pending orders so that when one fills, the other is cancelled automatically. A common use is a buy stop above a range and a sell stop below it, so you catch a breakout in either direction without ending up holding both positions.
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