There is no such thing as "the price" of a stock. At any instant there is a highest price someone is willing to pay, a lowest price someone is willing to accept, and a gap between them. Everything about order types follows from that fact.
Bid, ask and spread
- Bid — the highest price a buyer is currently willing to pay. If you sell right now, this is what you get.
- Ask (or offer) — the lowest price a seller is currently willing to accept. If you buy right now, this is what you pay.
- Spread — the gap between them. It is the cost of immediacy, and it is a real cost even when your broker charges zero brokerage.
- Depth — how many shares are waiting at each price level. Deep books absorb large orders; thin books do not.
The four orders that matter
Market order — "get me in, now"
Executes immediately against whatever is available. You are guaranteed a fill; you are guaranteed nothing about the price. In a liquid stock this is fine. In a thin one it can be brutal, because your order eats through several price levels — that difference between the quoted price and your actual average is called slippage.
Limit order — "at this price or better, or not at all"
You name a maximum you will pay (or minimum you will accept). If the market never reaches it, nothing happens. You control price completely and control execution not at all. For anything other than an emergency exit, this should be your default.
Stop-loss order — "get me out if I am wrong"
A resting instruction that activates only when price hits a trigger. Below the trigger it is invisible to the market. It comes in two forms, and the difference matters more than beginners expect.
| SL (stop-loss limit) | SL-M (stop-loss market) | |
|---|---|---|
| What you set | A trigger price and a limit price | Only a trigger price |
| On trigger | Places a limit order | Places a market order |
| Guarantees a fill? | No — a fast fall can jump past your limit | Yes, at whatever price exists |
| Guarantees a price? | Yes, within your limit | No |
| Fails when | Price gaps down through your range and leaves you holding | Price gaps down and you exit far below trigger |
GTT — "watch this for me for a year"
Ordinary orders die at the end of the day. A Good Till Triggered order sits with the broker for up to a year, waiting. It is the practical way for someone with a job to say "buy Titan if it ever falls to ₹2,900" without watching a screen. Note that a GTT lives at the broker, not the exchange — it only becomes a real order once triggered.
Which to use, and when
- You are buying anything outside the largest 200 companies.
- You are building a position and are not in a hurry.
- The market is volatile and quotes are moving fast.
- You are trading in the first or last fifteen minutes.
- You need out immediately and price is secondary — a genuine stop-out.
- The stock is highly liquid and the spread is a rounding error.
- Your order size is trivial relative to visible depth.
- Never, simply because it is the default in the app.
You hold a smallcap with a spread of ₹1.50 on a ₹75 share. You place a market order to buy, then immediately sell. Roughly what have you lost, before any brokerage?
Auto wale ko "chalo bhaiya, jo meter aayega de denge" bolna Market Order hai — turant baith jaoge, par kitna lagega pata nahi. "₹120 mein chaloge toh chalta hoon" bolna Limit Order hai — rate aapka, par shayad auto na mile. Jaldi hai toh pehla, rate ki fikar hai toh doosra.
- There is a bid and an ask, never a single price. The gap is a real cost.
- Market orders guarantee execution, not price. Limit orders do the reverse.
- SL-M guarantees you get out; SL guarantees your price but may leave you stuck.
- No stop-loss survives a gap — only position sizing protects you there.
- Default to limit orders in anything but the most liquid names.
Mark it done to track your progress through the curriculum.
Common questions
Short, direct answers to what people ask about this topic.
- difference between market order and limit order
- A market order buys or sells immediately at the best price currently available, prioritising speed over price; a limit order executes only at your specified price or better, prioritising price over certainty of execution. Market orders can fill at a worse price than expected in a fast or thin market, while a limit order may not fill at all if the price never reaches your level.
- what is a stop-loss order
- A stop-loss order is an instruction that stays dormant until the price hits a trigger level you set, at which point it becomes a live order to sell (or buy) — used to cap a loss on a position automatically. In India these are usually placed as SL orders with a trigger price and a limit price, so the exact fill still depends on the limit you attach.
- what is a GTT order
- A GTT (Good Till Triggered) order is a standing instruction that waits, often for many months, until your chosen trigger price is reached before it is placed on the exchange. It lets you set a target or stop level without keeping a normal day order alive — remember it is a request to place an order at trigger, not a guarantee of execution.
- what is bid-ask spread
- The bid-ask spread is the gap between the highest price a buyer will pay (the bid) and the lowest price a seller will accept (the ask). A narrow spread signals a liquid, actively traded stock, while a wide spread signals thin trading and raises your real cost, because a market order crosses that gap the moment it executes.
- what causes slippage in trading
- Slippage is the difference between the price you expected and the price you actually got, and it happens when a market order fills against orders at successively worse prices — most severe in illiquid stocks or during fast-moving, volatile periods. Using a limit order instead of a market order is the direct way to control it.