Short answer: A market order trades immediately at the best price available, a limit order trades only at your named price or better, and a stop-loss order sells automatically when a price falls to a set level. Market orders prioritise speed, limit orders prioritise price control, and stop-loss orders prioritise limiting losses.
Last reviewed: 3 November 2026
At a glance
| Order type | How it works |
|---|---|
| Market order | Executes immediately at the best price currently available |
| Limit order | Sets a maximum buying or minimum selling price; fills only when the market reaches it |
| Stop-loss order | Automated sell order placed once the security falls to a preset trigger price |
| Immediate-or-cancel order | Tries to fill fully or partially at once; any unfilled portion is cancelled |
What does a market order do?
A market order tells your broker to buy or sell right away at the best price currently in the market. In exchange for that speed, the buyer or seller gives up control over the exact execution price. The price you see when you click may not be the price you get.
Prices can move in the seconds between placing the order and its execution. In volatile markets, that gap can be large enough for the order to fill at a worse price than you expected. The trade-off is certainty of execution in exchange for uncertainty about price.
What does a limit order do?
A limit order lets you name the price you are willing to accept. For a buy, it is a maximum price, and the order executes at that price or lower. For a sell, it is a minimum price, and the order executes at that price or higher.
The catch is that a limit order does not execute right away. It fills only when the market reaches your specified price. If the price never gets there, the order does not fill, and you do not get the trade.
What does a stop-loss order do?
A stop-loss order is an automated risk-management tool. It places a sell order once the security falls to a preset trigger price, which is the level at which the sell is set in motion. Its purpose is to limit further losses on a holding.
A stop-loss does not protect against every loss. It only acts once the trigger price is reached, so losses that occur before that point are not limited by it. Because the order is triggered by the price level alone, a price that touches the trigger and then recovers will still have set the sale in motion.
How do the three compare in a worked example?
*Hypothetical example, with all figures invented for illustration only.* Suppose a share is quoted at ₹500 and you want to buy 200 shares, which would cost ₹1,00,000 at that price.
– Market order: You place it at ₹500, but by execution the best available price is ₹503. You pay 200 × ₹503 = ₹1,00,600, which is ₹600 more than the quoted price. – Limit order at ₹500: If the price falls to ₹498, the buy executes at ₹498 or lower. If the price rises to ₹510 and never returns to ₹500, the order does not fill and you hold no shares. – Stop-loss: Suppose you already hold those 200 shares bought at ₹500, with a trigger at ₹450. If the price falls to ₹450, the sell order is placed. At that point the paper loss is 200 × ₹50 = ₹10,000, but the sale itself may happen at a price different from ₹450.
The same share, three different instructions, three different trade-offs between speed, price and loss.
Where does an immediate-or-cancel order fit?
An immediate-or-cancel order tries to fill the order fully or partially at once. Any part that cannot be filled straight away is cancelled automatically, so it does not stay open in the market.
*Hypothetical example, with invented figures:* Suppose you place an immediate-or-cancel order for 200 shares and only 120 can be filled at once. The 120 shares are bought, and the remaining 80 are cancelled automatically.
What are the catches with each type?
Each order type has a trade-off that is easy to overlook. A market order’s catch is price uncertainty: the fill can be worse than the price you saw, especially when markets move quickly. A limit order’s catch is execution uncertainty: the price you wanted may never be reached, and the trade is missed.
A stop-loss order’s catch is that it protects only from the trigger price downward and only once it is reached. It is not a guarantee of the exact sale price. Understanding these limits before placing an order is the main way to avoid surprises with any of the three.
Frequently asked questions
Which order type executes fastest?
A market order is executed immediately at the best price currently available, so it prioritises speed of execution. A limit order and a stop-loss order do not execute until their price conditions are met.
Can a limit order fail to execute?
Yes. A limit order fills only when the market reaches the investor’s specified price, so if the price never gets there, the order does not fill.
What happens to the unfilled part of an immediate-or-cancel order?
An immediate-or-cancel order tries to fill as much as possible at once. Any unfilled portion is cancelled automatically.
Sources and last check
Facts in this article were checked against the sources below on 3 November 2026. Rules and figures can change; check the primary source before acting.
- upstox.com (broker education)
- icicidirect.com (broker education)
- groww.in (broker education)
This article is general information, not investment advice. MyFinanceBandhu is not a SEBI-registered investment adviser.
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