Placing a trade means sending an order. Knowing the main types, and what each one does and does not guarantee, prevents some very expensive beginner mistakes.
The three orders you must know
- A market order executes immediately at the best available price. It guarantees that you get in, not at what price.
- A limit order executes only at your price or better. It guarantees the price, not that you get filled.
- A stop order becomes a market order when price reaches a trigger. It is used both to enter on breakouts and to exit a losing trade.
Stop losses and slippage
A stop loss is the order that closes a trade at a loss you have decided is acceptable. It is the single most important order you will use. In fast markets or around news, price can jump past your stop and fill you worse than you planned. This is slippage, and it is another reason to risk only a small percentage per trade.
Practise safely first
A demo account lets you trade with simulated money. It is a good way to learn your platform's buttons and to practise following a plan. It is not a good test of how you will behave when real money is on the line, because losses on a demo do not hurt.
A sensible progression:
- Learn the platform and the order types on a demo account.
- Write a simple trading plan (you will do this in the Strategies lessons).
- Follow the plan on demo for long enough to judge whether you can stick to it.
- If you move to real money, start with an amount you could lose entirely without it affecting your life, and a very small risk per trade.