Limit vs Market vs Stop Orders: When and Why to Use Each

When you place a trade, you’re not just buying or selling, you’re choosing how that order gets executed. In derivatives trading, knowing the difference between limit, market, and stop orders can help you manage your strategy more efficiently.

Let’s break it down.

Limit Orders: For Trades at a Specific Limit Price

A Limit Order allows you to buy or sell at a specific price or better.

This is ideal when you want to enter a trade only at a specific price or when you’re setting a profit target to exit an open position.

Use it when:

• You want to buy BTC at, say, $60,000, but not higher
• You want to sell only if the price reaches a certain threshold
  
  

Tip: Limit Orders help you avoid slippage, but there’s a chance the order won’t fill if the market doesn’t reach your price.

Market Orders: For Immediate Execution

A Market Order executes immediately at the best available market price.

This is the fastest way to enter or exit a position—especially useful in volatile markets.

Use it when:

• Price movement is fast and you don’t want to miss the opportunity.
• You’ve already made a decision and just need the order filled instantly.

Note: Market Orders prioritize execution over price, which may lead to slippage.

Stop Orders: For Risk Management

A Stop Order (also called a stop-loss order) is triggered when the market hits a pre-set price. Once triggered, it becomes a market order and executes at the next available price.

Use it when:

• You want to automatically exit a position if the market moves against you
• You want to protect profits or set a loss threshold
  
  

Tip: Stop Orders are useful for disciplined risk management, especially in fast-moving markets.

Choosing the Right Order Type

Each order type serves a different purpose:

Knowing when to use each type can give you more control over your trades, not just in execution, but in strategy.

Explore these order types and more when trading Derivatives on Bitazza. Every feature is designed to help you navigate the market with more confidence, flexibility, and awareness.