Order Types Explained: Market, Limit, Stop and Trailing Stop Orders, With SPY Data

Michael Whitman · Trading since 2017, full-time since 2020 · YouTube creator, 137K subscribers · Published 2026-09-06 · Updated 2026-11-02 · Reviewed 2026-11-01

Order types are the instructions that tell a broker how to trade: a market order fills now at the available price, a limit order fills only at your price or better, and a stop order waits for a trigger. On SPY since 1996, a buy limit 1% under the close was reached within five sessions only 53.86% of the time.

How it works

An order type is an instruction about how to trade, never about whether to. The decision is yours. The order type only decides what the broker is permitted to accept on your behalf.

A market order says: fill me now, at whatever the best available price is. It is a certainty about execution and an open question about price. In a stock that is open and trading, it fills at once, and the price is whatever the order book holds at that moment.

A limit order says: fill me at this price or better, and not otherwise. It is a certainty about price and an open question about execution. If the market never comes to your number, nothing happens and you own nothing.

A stop order is the third type and it is the one most often misunderstood. A stop is a trigger. When price touches it, a market order is sent. The stop price is where the order wakes up, not where it fills, and the stop order page measures how often SPY opened past one.

That trade-off between price and execution is the whole subject, and it can be counted rather than argued.

Every order type side by side

Each row below fixes one thing and leaves another open. Reading across a row is quicker than reading six definitions, and the last column is the case that catches people.

The detail for each lives on its own page: market order, limit order, stop order, stop-limit order and trailing stop. This page is about choosing between them.

The fill-rate trade-off

Take a buy limit resting below the market, good for five days. It fills only if price trades down to the limit at some point in those five days. If it never does, the order expires and you own nothing.

Now ask which trades it missed. A miss means price never dipped to the limit, so every missed order is, by construction, one where the market did not offer the discount. That leans the misses toward days when price rose instead, and the SPY count below shows how far.

Moving the limit further away buys a better price and costs fill rate. A limit 2% under the close can only be reached on a day that also reached 1% under, so the deeper order can never fill more often.

A worked example: a 1% buy limit on SPY

On 19 Oct 2026 SPY closed at $766.48. A buy limit 1% under that close sits at $758.82, good for the next five sessions.

The lows that followed were $764.25 on 20 Oct, $768.40 on 21 Oct, $761.17 on 22 Oct, $758.68 on 23 Oct and $761.63 on 26 Oct. The 23 Oct low reached the limit by 14 cents, so this order was touched on its fourth day.

On 26 Oct SPY closed at $765.37, 0.86% above the $758.82 limit and 0.14% under the original close. Had that low been 14 cents higher, the order would have expired unfilled, with the price back near where it started.

A second worked example: a trailing stop on SPY in 2026

Suppose SPY was bought at the 31 Mar 2026 close of $650.34 with a 3% trailing stop. On daily bars, the trigger sits 3% under the highest intraday high since the purchase and fires when a session’s low reaches it.

SPY climbed for two months. Its highest high in that run was $760.40 on 2 Jun 2026, which lifted the trigger to $737.59. On 5 Jun it opened at $752.31, traded down to $735.53 and closed at $737.55, four cents under the trigger. The stop fired that day, 46 sessions after the purchase.

Filled exactly at the trigger, the exit was 13.42% above the purchase price and 3.00% below the high. That fill is the best case: once the trigger is hit the order is a market order, and any fill below $737.59 comes out of that gain.

The same purchase with a 5% trail stayed open three weeks longer. Its trigger, also set from the $760.40 high, was $722.38, and SPY did not reach it until 26 Jun 2026, when the low was $716.58. Exiting at that trigger kept 11.08% above the purchase price. Measured on closes instead, the 3% trail would have fired at the 10 Jun open of $733.39, below its trigger.

By 26 Oct SPY was back at $765.37, so both stops sold before a later high. The trail protects a gain, and it does not know whether the dip is the start of something or a pause. The trailing stop page covers how to size the distance.

The original data

The test: every SPY close from 2 Jan 1996 to 19 Oct 2026, 7,750 in all, places a buy limit a fixed percentage under that close, good for the next five sessions. It counts as touched if any of those five lows reached the limit. “Closed higher” compares the close five sessions later with the order day’s close. Prices are SPY’s daily bars as traded, from Yahoo Finance; the windows overlap, so neighboring days share most of their path.

Across all 7,750 days, SPY closed higher five sessions later 57.60% of the time, with a median change of +0.35%. Among the missed 1% orders the share was 88.31% and the median +1.24%. Among the touched ones the median five-session change was -0.85%. The trader who waited for a discount got one mostly on the weaker weeks, and missed the stronger ones.

The split held across three periods: a 1% limit was touched on 57.96% of days in 1996-2007, 56.03% in 2008-2015 and 47.68% in 2016-2026, and the missed orders closed higher 88.43%, 89.39% and 87.54% of the time.

Two limits on what a daily bar can show. A touch means price traded at the limit, which is the most a daily low can tell you; an order at the back of the queue at that exact price may still go unfilled, so the touched shares are the best case. And none of this is a result for any strategy: it counts orders, not trades, before any cost. Every order day is in the 1% limit file.

Checked against Nasdaq’s own SPY history (26 Oct 2016 to 26 Oct 2026, with the 20 Apr 2026 row left out because it repeats one price with no volume, along with every five-session window that crosses it): on the 2,502 order days both files cover, the 1% limit was touched or missed on exactly the same days, 1,189 touched.

Of the 24,971 trading and investing videos measured for this site, 9 have “order types” in the title, from 8 channels, at a median of 39,153 views.

In practice: stops, gaps and duration

A stop sitting inside an overnight gap does not fill inside it. The market opens past the trigger, the stop converts to a market order, and it is filled at the open. The distance between those two numbers is the cost of the gap, and no order type removes it.

A stop-limit is the compromise and it cuts both ways. It triggers like a stop and then behaves like a limit, so it refuses a bad fill. On a gap past its limit price it refuses every fill, leaving you in a position you had decided to exit.

Underneath all of this is one queue. A limit order rests in the order book and waits its turn. A market order removes resting orders. An order smaller than a round lot does not set the national best bid or offer, and since November 2025 a round lot is 100 shares only for stocks averaging $250 or less; from $250.01 to $1,000 it is 40 shares, which covers SPY at $765.

Duration is the setting people forget. A day order expires at the close; a good-till-canceled order stays open across sessions until it fills, you cancel it, or the broker’s own time limit ends it. An order left resting for weeks can fill on a day when the reason you placed it no longer applies.

Two more duration settings are narrow tools. Fill-or-kill demands the entire quantity immediately or cancels; immediate-or-cancel takes whatever is available right now and cancels the remainder. Both matter when the size is large enough that a partial fill is a real possibility.

A trailing stop is a stop whose trigger moves. You set a distance rather than a price, and the trigger follows the position’s favorable direction while never moving back. It is still a market order once it fires, so everything said about gaps applies to it unchanged.

Market-on-close and limit-on-close route into the closing auction rather than the continuous session. That auction strikes a single price once, at the official close.

When it fails

A limit order’s fill rate is not a property of the order — it is a property of the market. SPY’s 1% limit was touched on 57.96% of days in 1996-2007 and 47.68% in 2016-2026, with the same rule. In a steady climb it misses more often, which is when you most wanted to be on.

And the spread is charged regardless. Choosing a limit order does not avoid it; it changes which side of it you are standing on. A market order crosses it and pays immediately. A resting limit order is on the receiving side of the next person who crosses.

The third failure is a limit order that fills for the wrong reason. A buy limit resting well below the market fills when something has gone wrong badly enough to reach it. Touched 5% limits had a median five-session change of -4.33% from the order day’s close: the order did what it was told, on the weeks that fell hardest.

The fourth is a stop-limit on a gap. The limit protects the price and abandons the exit, which is the opposite of what most people placed it for.

Questions people ask

What are the main order types?

Market, limit and stop orders, plus combinations of them: a stop-limit, a trailing stop, and the closing orders that route into the auction. Every one of them is a different answer to the same trade-off between a certain fill and a certain price.

How often does a buy limit order fill?

On SPY from 1996 to 2026, a buy limit 1% under the close was touched within five sessions on 53.86% of days, and one 2% under on 31.11%. A touch is the best case, because an order late in the queue at that price can still be skipped.

Is a limit order better than a market order?

Neither is better in general. The limit order wins on price when it fills; the market order wins on certainty. On SPY, 88.31% of the missed 1% limits saw the price close higher five sessions later, so the cost of the limit order is concentrated in the moves you wanted most.

What is a trailing stop order?

A stop whose trigger follows the price. On SPY bought at $650.34 on 31 Mar 2026, a 3% trail rose with the $760.40 high of 2 Jun to $737.59 and triggered on 5 Jun; it still becomes a market order when it fires.

What does time in force mean?

How long an order stays live: a day order ends at the close, good-till-canceled stays open across sessions, and immediate-or-cancel or fill-or-kill last only an instant.

Does a stop order lock in my price?

No. A stop order becomes a market order when it triggers and fills at whatever is available, which can be well past the stop on a gap. A stop-limit holds the price but may not fill at all.

Related

The order book is the queue every one of these joins. The bid-ask spread is what a market order pays to cross. And a stop-loss is an order type with a job attached, which is why its placement is a separate question from its mechanics.

This page is educational, not financial advice. Test every idea on your own charts before risking money.