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Learn the differences between market, limit and stop orders with limits, and which order type is right for different circumstances or market conditions.
CIBC Investor's Edge Dec. 10, 2020 5 minute read
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Market order

Here's an example: You want to buy BARK stock which is currently trading at $50 (bid) — $50.05 (ask). It’s more important to you that your order is filled than being certain about the price you’ll pay. The price where it’s currently trading is generally acceptable. However, you acknowledge that you may not receive the price you see quoted, especially if the market is volatile. You place a market order to buy 100 shares of BARK. Your order is filled on the best execution terms available at the moment your order is executed in the market.

Limit order

Here's an example: You want to buy BARK stock which is currently trading at $50 (bid) — $50.05 (ask). You think the price where it’s currently trading is acceptable, but you don’t want to pay a higher price. You place a limit order to buy 100 shares of BARK at $50. If and when your order is completely filled, your fill price will be no more than $50 per share for 100 shares. Your order might also be partially filled, in which case your fill price will be no more than $50 per share for each share that you end up purchasing.

Stop order with limit3

Here's an example: You own BEEP shares, which are currently trading at $50. Although you believe BEEP will move higher, you’re not comfortable holding BEEP if it starts to decline. You place a stop-limit sell order at $48 with a limit of $47. If BEEP trades at $48, your sell order is triggered. You now hold an order to sell BEEP at the best price available, but no lower than $47.

Here's an example: You are short BLIP shares, which are currently trading at $50. Although you believe BLIP will move lower, you’re not comfortable holding BLIP if it starts to rise.

Want to learn more? Check out our guides on Understanding trailing stop limit orders and Understanding short selling.

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