Education · Stage 4 · 02
Order types: stop, limit, bracket, OCO
There are only two things you can actually ask for: take whatever is available now, or wait at a price you choose. Every other order in the platform is one of those two with a trigger attached — and knowing which one you are holding decides what happens on the day it matters.
Mak · 4 min read · Stage 4, article 2 of 3
The two primitives
From the previous article: a price exists when somebody crosses the spread. The two orders map directly onto the two roles in that sentence.
- Market — certainty of filling
- Takes what is resting right now. You will be in the trade. You do not choose the price, and in a fast or thin market it can be several ticks from what you saw.
- Limit — certainty of price
- Joins the queue at a price you name and waits. You will never pay worse than that. You may never be filled at all, which is a cost that never appears on a statement.
That is the whole trade-off, and no order type escapes it. Anything that promises both is promising something the market cannot deliver.
A stop is not an order type. It is a trigger
This is the single most misunderstood item in any platform, and it is worth being exact.
A stop is an instruction that sits dormant until price touches a level you chose. At that moment it sends an order — and which order it sends is a setting most people never look at.
| Order | Guarantees | Does not guarantee |
|---|---|---|
| Market | A fill | The price |
| Limit | The price, or better | A fill |
| Stop-market | A fill once triggered | The price — often the worst part of the move |
| Stop-limit | The price once triggered | A fill. You can be left in the position |
Brackets and OCO
A bracket is an entry with two exits attached: a target above and a stop below, or the mirror image. The two exits are joined as OCO — one cancels the other — so when one fills, the other disappears instead of leaving you accidentally in a new position facing the wrong way.
The mechanical value is obvious. The real value is psychological and worth naming: a bracket forces you to decide where you are wrong before the money is at risk, at the only moment when you can think clearly about it. Everything in the risk stage of this path depends on that number existing in advance.
Two details that catch people:
- Partial fills. If your entry fills half your size, check what the bracket does with the rest. Platforms differ.
- Moving one leg does not always move the other. Dragging a target rarely adjusts the stop, however much it feels like one action.
Where your stop actually lives
Here is the one nobody tells beginners, and it is the reason this article exists rather than being a page of definitions.
Some platforms hold your stop on your own machine and only send an order when the trigger is hit. Others place it with the broker or the exchange, where it lives independently of you.
A locally-held stop works perfectly — while the application is open, the machine is awake and the connection is up. Close the laptop, lose the wifi, or have the platform crash, and the protection is gone with no warning, because it was never anywhere else.
This is a question with a factual answer, and it takes one email to your broker: are my stop orders held locally or server-side? Ask it before you need to know.
How long the order lives
Two settings, and one of them interacts with something from stage 1.
- Day — cancelled at the end of the session. What most intraday traders want.
- GTC, good till cancelled — it waits until it fills or you remove it.
A GTC order left on a contract that expires does not migrate to the next one. It sits on an instrument the market has abandoned, waiting for a price nobody is trading any more. Clearing out old working orders is part of the roll, and it is the part everybody forgets.
The habit worth building
Before you trade a new platform, or after any update, spend ten minutes in simulation answering four questions with your own hands:
- What does my stop send when it triggers — market or limit?
- Is it held here or at the broker?
- What does my bracket do on a partial fill?
- How do I flatten everything, instantly, without thinking?
None of that is trading. It is the machinery, and it is the only part of this business you can make certain in advance.