Limit order vs Stop order

Look-alike pair

A limit order and a stop order differ in one decisive way: a limit order is an instruction to trade only at a specified price or better, while a stop order is an instruction to trade once the market reaches a specified price, after which it becomes a market order. That single distinction determines when each order type is appropriate and what execution price you can expect.

Side by side

	Limit order	Stop order
Primary purpose	To control the price at which a trade occurs.	To control the timing or trigger point of a trade.
Execution price	Executes at the limit price or better; may not execute if the market never reaches that price.	Once triggered, executes at the next available market price, which may be worse than the stop price.
Direction relative to market	A buy limit is placed below the current market; a sell limit is placed above.	A buy stop is placed above the current market; a sell stop is placed below.
Field mark	The order ticket shows a fixed limit price and typically an order type of 'Limit'.	The order ticket shows a stop price and typically an order type of 'Stop' or 'Stop Market'.
Typical use case	Entering or exiting at a specific price, often to capture a better price than the current market.	Entering on a breakout or exiting to limit losses (stop-loss).
Risk of no execution	Higher: the market may never reach the limit price.	Lower: once the stop price is reached, the order becomes a market order and is generally filled.

Which word to use

Use a limit order when you care about the exact price and are willing to risk not getting filled; use a stop order when you care about getting out or in once a certain price is reached, even if the fill price is not guaranteed.

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