What is the difference between a market order, limit order, and stop order?

Modified on Wed, 23 Jul at 4:37 PM

You can place several order types on Freedx exchange. You can learn more about the different order types on ours blog.

Market Order

Definition: Executes immediately at the current best available market price.

Use Case: When you need to buy or sell instantly.

Example:

You place a market buy order for 1 BTC at the current asset’s price of $97,000.

The order executes instantly at the current market price.

Limit Order

Definition: Sets a specific price at which you want to buy or sell. The order is carried out only if the market reaches your chosen price.

Use Case: To control the price at which you buy or sell.

Example:

You place a limit buy order to purchase 1 BTC at $80,000

The order remains in the order book until the market price drops to $80,000. If it doesn’t, the order will not be fulfilled.

Stop Order

Definition: A conditional order that triggers a market or limit order when the market price reaches a specified stop price.

Use Case: To limit losses or secure profits by triggering trades at specific price points.

Example:

You set a stop sell order for 1 BTC at $98,000.

If the price drops to $98,000, the order triggers and sells your BTC to minimize losses.

Comparison Table

Order Type	Execution Speed	Control Over Price	Use Case
Market Order	Immediate execution	No control over price	Quick trades at current market price
Limit Order	Executes when price matches	Full control over execution price	Trading at specific desired prices
Stop Order	Executes when stop price is hit	Triggers market/limit order upon conditions	Risk management and strategic trading