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Chapter · Master Robinhood

Order types explained

An order type is the instruction you give when buying or selling. A market order fills right away at the best available price, but that price can move. A limit order only fills at your chosen price or better, giving you control but no guarantee it fills. A stop order becomes a market order once a trigger price is hit, often used to limit a loss. A stop limit combines the two. Choosing the right order type is one of the simplest ways to trade more carefully.

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What you get asked

  1. What is the tradeoff of a market order?

    A market order prizes speed over price. It usually fills fast, but in a fast moving or thin market the fill price can differ from what you saw a second earlier.

  2. A ___ order only fills at your chosen price or better, but it might not fill at all.

    A limit order gives you price control. The catch is that if the market never reaches your price, the order simply sits unfilled.

  3. Match each order type to what it does

    Each order type trades control against certainty. Market favors certainty of filling, limit favors control of price, and stops help you plan an exit in advance.

  4. Why might a stop order be useful?

    A stop order is a planned exit. It can help limit a loss, though in a fast drop the actual fill may be below your trigger, so it is a tool and not a magic shield.

  5. Order these from most certain to fill to least certain to fill

    A market order almost always fills. A triggered stop becomes a market order. A limit near the price often fills, while a limit far away may never fill.

The rest of this chapter

Learn how Robinhood works, how it makes money, and how to trade with discipline instead of hype.