Order types and when to use them

Choose order types based on the strategy's priority: participation, price control, breakout activation, or risk protection.

Match the order to the strategy

A market order is appropriate when entering now matters more than the exact price. A limit order is appropriate when price control matters more than guaranteed entry. A stop order can activate a breakout idea or become a protective exit.

The right choice depends on liquidity, volatility, holding period, and how much missed participation changes the strategy's expected outcome.

Know the failure modes

Limits can miss a move. Stops can trigger during a brief spike. Market orders can slip. A protective stop can execute at a worse price during a gap. These are not bugs in the order type; they are trade-offs that must be included in the risk model.

Define allowed deviation or fill tolerance.
Handle rejected and expired pending orders.
Log requested and realised prices.
Test order behaviour when the market is closed or spread is abnormal.

Do not hide an order decision

The strategy specification should say why an order type is used and what happens if it does not fill. Silent fallbacks from limit to market can change the strategy and risk without appearing in the report.

Make the fallback explicit, bounded, and visible in logs.

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