A market order fills immediately at whatever price is available right now. A limit order only fills at a specific price or better, so it might not fill at all. A stop order sits inactive until price reaches a trigger level, then fires - the same mechanism behind a stop loss. Most trading platforms, and most automated strategies, are built entirely out of these three primitives; everything else is a variation on when one of them gets placed.
Market orders: filled now, at whatever the price is
A market order tells the platform to execute immediately at the current price, with no condition attached. That's the appeal - guaranteed, instant execution - and the trade-off: in a fast-moving or thin market, the price that actually fills (real execution) can differ slightly from the price shown a moment before the order was sent, an effect called slippage.
Limit orders: a price floor or ceiling, never crossed
A limit order only fills at the price specified or better - a buy limit fills at that price or lower, a sell limit at that price or higher. It guarantees the price; what it doesn't guarantee is that the order fills at all, since the market may simply never trade there. A take profit is a limit order under a different name: it closes a position once price reaches a favorable level.
Stop orders: inactive until price reaches a trigger
A stop order does nothing until price crosses a specified trigger level, at which point it activates - typically as a market order from that point on. A stop loss is the most familiar example: it sits dormant while a trade is open, then closes the position once price moves against it far enough to reach the trigger.
| Order type | Fills at | Common use |
|---|---|---|
| Market | Current price, immediately | Entering a trade the moment a condition is true |
| Limit | Specified price or better | Take profit; entering only at a favorable price |
| Stop | Triggers once price crosses a level | Stop loss; entering on a breakout |
Which one an automated strategy should actually use
Most strategies enter with a market order, since the entry condition itself (RSI crossing 70, price crossing a moving average) already confirms the moment to act - there's rarely anything to gain by waiting for a marginally better price once the signal has fired. Limit and stop orders do the rest of the work: a take profit is a limit order, a stop loss is a stop order, both placed the moment the position opens, not decided in the moment.