Crypto markets are always moving, and it can be difficult to control exactly when and how your trades are executed. So it’s important to understand the different types of order you can place.
There are four main types of order available on Pepperstone Crypto:
Market order
Limit order
Stop-market order
Stop-limit order
Let’s take them one at a time…
Market order
A market order is simply an instruction to buy or sell immediately at the best available price in the market.
This is the type of order to use when speed and certainty of execution are more important than getting a specific price. For example, if the market is trending in response to breaking news and you want to get in or out sooner rather than later, then a market order is probably the way to go.
However, market orders give you minimal control over the price you end up getting.
If there’s not much liquidity in the market, or prices are moving really fast, you may suffer from slippage, which is when the price you get when your order is filled is worse for you than the price you saw when you placed the trade.
Example of using a market order:
Bitcoin is currently trading around $75,000.
You place a market order to buy $1000 worth of Bitcoin.
Your order is executed immediately using the best available market prices at that moment.
You may receive slightly more or less than 0.01 BTC depending on price movement during execution.
Limit order
A limit order allows you to set the exact price at which you want to buy or sell. A buy limit order will see your trade executed at your chosen price or lower, while a sell limit order will be filled at your chosen price or higher.
This is the best order type to use if you want to eliminate the risk of negative slippage, or if you want to enter or exit a trade only when the market reaches a more favourable level, eg when looking to ‘buy the dip’ or lock in profits.
With limit orders, however, what you gain in control over price, you lose in certainty of execution, as your order may remain unfilled if the market never reaches the limit price.
Example: Buy Limit Order
Ethereum is currently trading at $4,500.
You believe the price may drop, so you place a limit order to buy ETH at $4,200.
Your order will only execute if Ethereum reaches $4,200 or lower, and there are matching sell orders available at that price level.
Example: Sell Limit Order
Solana is currently trading at $220.
You want to sell only if the price increases.
You place a limit sell order at $250.
Your order will only execute if Solana reaches $250 or higher, and there are matching buy orders available at that price level.
Stop-market order
A stop-market order works like a regular market order but only once the market hits a specified price, aka the stop price.
This type of order is perhaps most commonly used for risk management, where traders set the stop price as a ‘stop-loss’ to keep potential losses within an acceptable range. But it can also be used to enter trades automatically during breakouts.
Of course, like a regular market order, once triggered, stop-market orders are filled immediately at the best available price and are subject to the risk of slippage.
Example of stop-market order:
You bought Bitcoin at $75,000.You want to limit your losses if the price drops.
You set a stop market order at $70,000.
If Bitcoin falls to $70,000, your order is triggered and automatically becomes a market sell order.
Your Bitcoin will then be sold at the best available price at that time, which may be slightly above or below $70,000 depending on market conditions.
Stop-limit order
As the previous examples show, using a stop-market order leaves you susceptible to slippage. You can mitigate that risk by instead using a stop-limit order, which requires you to specify two price conditions:
The stop price – As before, this is the level that triggers the order, but what’s different this time is the order is not a market order but a limit order, meaning you also need to set…
The limit price – This is the maximum or minimum level at which you’d want the trade to execute
You’d use a stop-limit order for the same reasons as a stop-market order, but the additional control it gives you over the final execution price means you can avoid excessive slippage. However, as with a regular limit order, what you gain in control over price, you lose in certainty of execution.
Example of stop limit order:
You bought Ethereum at $4,500.
You want to protect yourself from a price drop but still control the selling price.
You set:
- Stop price: $4,200
- Limit price: $4,100
If Ethereum drops to $4,200 your stop limit order is triggered and becomes a limit sell order at $4,100.
Your order will only execute if the market can match your price of $4,100 or better. If the price falls too quickly below that level, the order may not be filled.
Simple Difference
- Stop Market Order: Executes immediately after trigger (no fixed price)
- Stop Limit Order: Executes only at your chosen price or better (not guaranteed)
In summary
Order type | What it does | Key feature | Best for... | Potential downside |
Market | Buys or sells instantly at the current market price. | Guaranteed execution | Traders who want to enter or exit a position immediately. | No price control; risk of ‘slippage’ in fast-moving markets. |
Limit | Buy or sells at a specific price user set. | Guaranteed price | Traders who want to buy at a specific low price or sell at a specific high price. | May not execute if the market never reaches the target price. |
Stop-market | Becomes a market order when a "stop price" is reached. | Guaranteed execution once triggered | Automating stop-losses to limit potential losses or entering a trade during a breakout. | Risk of slippage; the final price may be different from the stop price. |
Stop-limit | Becomes a limit order when a "stop price" is reached. | Guaranteed price once triggered | Managing risk by combining a trigger with a greater degree of price control. | The order may not fill if the market moves too quickly past your limit price. |