Order

Stock trading dictionary: meaning, example and how traders use it.

Last updated: October 17, 2026

Definition: An order is an instruction an investor gives a broker to buy or sell a security, specifying the quantity and conditions such as price limits, triggers, and how long the instruction remains active.

How a stock order works

When you place an order, your broker routes it to an exchange, a market maker, or another trading venue for execution. Brokers have a duty to seek the best execution reasonably available. Every order needs a symbol, side (buy, sell, or sell short), quantity, order type, and time in force. The current quote shows the highest bid and lowest offer, which tell you roughly where an order can be filled.

Main order types

  • Market order: buy or sell immediately at the best available price. It almost always fills, but the price is not guaranteed, which matters in fast or illiquid markets.
  • Limit order: buy at or below, or sell at or above, a specified price. The price is controlled, but the order may not fill.
  • Stop order (stop-loss): becomes a market order once the stock trades at the stop price. It is often used to limit losses, but during a gap it may fill well beyond the stop.
  • Stop-limit order: becomes a limit order at the trigger, giving price control at the risk of not filling if the market moves through the limit.
  • Trailing stop: a stop that moves with the price by a set amount or percentage, locking in gains as a stock rises.

Time in force

A day order expires if not filled by the end of the session. A good-til-canceled (GTC) order stays open until filled or canceled, though brokers usually set a maximum duration. Other instructions include fill-or-kill, immediate-or-cancel, and orders eligible for pre-market or after-hours sessions, where brokers typically accept only limit orders.

Example: choosing an order type

Suppose a stock is quoted at $25.00 bid and $25.05 ask. A market order to buy 100 shares would likely fill near $25.05. A limit order at $24.90 would fill only if sellers come down to that price, which may never happen.

After buying at $25.05, the investor could place a stop at $23.50 to cap the loss near $155. If the company reports bad news overnight and the stock opens at $21.00, the stop triggers at the open and fills near $21.00, not $23.50, a loss of about $405. A stop-limit at $23.50 with a $23.00 limit would not fill at all in that case, leaving the shares unsold.

Tips for placing orders

Use limit orders for thinly traded stocks with a wide spread, during the volatile first minutes after the open, and outside regular hours. Check the quantity and symbol before submitting, and remember that stops do not guarantee a price. Order choices directly affect trading costs and risk.

Frequently asked questions

What is the difference between a market order and a limit order?

A market order fills immediately at the best available price, while a limit order fills only at the specified price or better and may not fill at all.

Does a stop-loss order guarantee my exit price?

No. A stop becomes a market order when triggered, so in a fast market or a gap it can fill at a price worse than the stop.

What does GTC mean on a stock order?

Good-til-canceled means the order remains active across sessions until it is filled or canceled, subject to the broker's maximum duration.

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For information only, not investment advice. See the disclaimer.