Part 5 · Chapter 1

Order Types Explained

AT A GLANCE

Market, limit, stop, and take-profit orders give you control over price and risk. You'll learn when to use each and how order book dynamics affect execution.

Market OrdersLimit OrdersStop-LossOrder BookModifiers

Who Is This For?

•New traders executing their first orders
•Intermediate users refining entries and exits

Learning Objectives

1.Differentiate market, limit, stop-loss, and stop-limit orders
2.Choose order modifiers to control execution
3.Read order books to anticipate slippage

Section 1

Core Order Types

Every trade starts with an order. The type you choose determines your tradeoff between speed, price control, and certainty.

🎛️ Order Type Explorer

⚡

Market Order

Executes immediately at the best available price. You get your fill right now, but the exact price depends on what's available in the order book.

Speed

Instant

Price Control

None

Fill Guarantee

Guaranteed (if liquidity exists)

📝 Example:

ETH is at $2,000. You place a market buy for 1 ETH. The best ask is $2,001.50 — you pay $2,001.50. Simple, instant, done.

✅ When to Use:

When speed matters more than price — you need to enter or exit NOW. Breaking news, liquidation risk, or capturing a fast-moving opportunity.

⚠️ Watch Out:

On illiquid pairs or large sizes, market orders can "walk the book" — filling at progressively worse prices. A $50,000 market buy on a thin order book could pay $2,000, then $2,010, then $2,050.

Role: Taker — you remove liquidity from the book and typically pay higher fees.

🎯 Bracket Order Builder

Set your entry, stop-loss, and take-profit to see the full trade plan:

Entry Price ($)

Position (ETH)

Stop-Loss (%)

Take-Profit (%)

Take-Profit

$2,200+$200.00 profit

Entry

$2,0001 ETH ($2,000)

Stop-Loss

$1,900-$100.00 loss

Risk : Reward

1 : 2.0

✅ Good ratio

Max Risk

$100

5% of entry

Target Gain

$200

10% of entry

Section 2

Order Book Basics

The order book is where all resting orders live. Reading it tells you where liquidity sits and how much slippage to expect.

📊 Order Book & Slippage Simulator

ETH/USDC order book. Try a market buy and watch how it fills across price levels:

Best Bid: $2000.00Spread: $1.00 (0.050%)Best Ask: $2001.00

ASKS (Sellers)

$2005.000.8 ETH

$2003.501.2 ETH

$2002.002.5 ETH

$2001.503.0 ETH

$2001.005.0 ETH

BIDS (Buyers)

$2000.004.5 ETH

$1999.503.2 ETH

$1999.002.8 ETH

$1998.001.5 ETH

$1997.001.0 ETH

⚡ Market Buy Simulator

Buy Size (ETH)

0.52 ETH15

📥 Makers (Add Liquidity)

Place limit orders that rest on the book. They provide liquidity for others. Typically pay lower fees or earn rebates.

📤 Takers (Remove Liquidity)

Place market orders (or aggressive limits) that fill immediately. They consume resting orders. Typically pay higher fees.

⏱️ Order Modifiers

Modifiers control how long an order lives and how it fills:

GTC (Good Till Cancel)

Order stays on the book until it fills or you cancel it. Could sit there for days, weeks, or months.

When to Use:

Default for most limit orders. Set your price and walk away.

Example:

Limit buy ETH at $1,800 GTC — order sits until ETH hits $1,800 or you cancel.

⚠️ You might forget about old orders that fill unexpectedly when price reaches them weeks later.

Section 3

Practical Usage

Knowing the order types isn't enough — you need to know when to reach for each one.

🧠 Real Scenarios: Which Order?

Scenario: Buying the Dip

ETH is at $2,000. You think $1,850 is strong support and want to buy if it reaches there.

✅ Best Order:

Limit Buy at $1,850

You control the price. If ETH drops to $1,850, you get filled. No risk of slippage. If it never drops, you don't buy.

❌ Avoid:

Market order at $2,000 — no reason to pay market price if you think it's going lower.

Scenario 1 of 4

📋 Order Selection Cheatsheet

⚡Market: Need to get in/out NOW. Accept slippage cost.

🎯Limit: Have a specific price. Willing to wait for it.

🛑Stop-Loss: Protect from downside. Essential for leveraged trades.

💰Take-Profit: Lock in gains at target. Remove emotion from exit.

🔒Stop-Limit: Protect downside but refuse bad fills. Risk: may not fill.

📥Post-Only: Guarantee maker fees. Great for frequent traders.

Watch Out

Common Mistakes & Gotchas

🫠

I market-bought $20,000 of a microcap token — got way less than expected

Small-cap tokens have thin order books. A $20K market buy can move the price 5-20%. Always check the order book depth first. Use limit orders for any significant size on illiquid pairs.

🎯

I set my stop-loss at exactly $2,000 — a nice round number

Round numbers ($2,000, $1,500, $1,000) are where everyone's stops cluster. Market makers know this and may push price through round numbers to trigger stops before reversing. Set stops slightly below key levels ($1,987 instead of $2,000).

💸

I thought I was getting maker fees but I paid taker fees on my limit order

If your limit price crosses the spread (e.g., limit buy above the best ask), it fills immediately as a taker. Use post-only modifier to guarantee maker status, or set your limit below the best ask.

🔢

I placed an order for 0.1 tokens but got 100,000,000 tokens — decimal error

Different tokens use different decimal places (ETH: 18, USDC: 6, WBTC: 8). On DEX interfaces or direct contract calls, double-check units. A misplaced decimal can mean buying 1,000x what you intended.

📋 Golden Rule: Before every trade, answer three questions: What's my entry? What's my stop-loss? What's my target? If you can't answer all three, you're gambling, not trading.

Test Yourself

Knowledge Check

Next Steps

→Continue learning: "Technical Analysis Basics" to interpret charts alongside your order placement

→Hands-on practice: Place a tiny limit order and stop-loss on a test account to see how fills work in real time