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9.4 Lessons learnt

What you have learnt

The two main order types are: market orders and limit orders

  • A  market order is an order to buy or sell a stock at the market’s current best available price.
  • A  limit order is an order to buy or sell a stock with a restriction on the maximum price to be paid or the minimum price to be received.
  • You may have your preference of order type. However, in order to decide which suits best in different situations, you should know the characteristics of both order types.
  • The main risk of a market order is that the outcome of the price can be significantly different than you expected. 
  • The risk of a limit order is that the order won’t be executed. 
  •  A stop-loss order enables you to define the level where a position must be closed to prevent losses to become too big.