A market order executes immediately at the best available price. It guarantees execution but not the price. A limit order sets the maximum price you will pay (for buys) or the minimum you will accept (for sells). It guarantees the price but not execution.
For most liquid stocks, market orders execute at prices very close to the quoted price. However, for thinly traded stocks or during volatile periods, the execution price can differ significantly from what you expected — this is called slippage.
A stop order (or stop-loss) becomes a market order once a specified trigger price is reached. It is used to limit losses or protect gains. A stop-limit order combines both — it triggers at a stop price but only executes at the limit price or better.
These order types are essential risk management tools. A trailing stop automatically adjusts the trigger price as the stock moves in your favor, allowing you to lock in gains while still participating in upward movement.
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