Order types: market, limit, stop
What you learn in 3 minutesThis lesson shows how the same idea costs three different prices depending on the order type you pick. A market order takes the price on the screen now. A limit order waits for a better price. A stop order triggers only once price reaches a worse price. On EUR/USD around 1.0850, one pip on one standard lot is 10 units of the quote currency, converted to naira at the current rate. If that rate is ₦1,600 to the dollar, one pip is about ₦16,000, so the choice of order type is a choice about money.
One idea, three prices, three naira costs
| Step | Amount | Note |
|---|---|---|
| Current EUR/USD price | 1.0850 | the price shown on the chart now |
| Market order entry | 1.0850 | takes the current price immediately |
| Limit order entry | 1.0830 | 20 pips better than the current price, so it waits |
| Stop order entry | 1.0870 | 20 pips worse than the current price, so it triggers only if price moves there |
| Pip value on one standard lot | ₦16,000 | 10 units of the quote currency, converted at ₦1,600 per unit |
| Cost of the 20-pip gap, limit vs market | ₦320,000 | 20 pips x ₦16,000 per pip |
| Cost of the 20-pip gap, stop vs market | ₦320,000 | 20 pips x ₦16,000 per pip |
The broker may quote a slightly different price when your order fills, and may charge a spread, commission or swap on top. These vary between brokers, so check the terms before you trade.
The mistake people make here
Many beginners use a market order for every entry because it feels simple, then wonder why the fill price is not the price they saw. The screen price can move between the moment you click and the moment the order fills. Others place a stop order to enter and treat it like a limit, forgetting that a stop triggers at a worse price by design. Decide first what price you are willing to accept, then choose the order type that matches it. If you need the trade now, use a market order and accept the current price. If you can wait, use a limit order and let the market come to you.Check yourself
EUR/USD is at 1.0850. You place a limit order 15 pips below the current price. What entry price does that give, and what is the 15-pip gap worth on one standard lot at ₦16,000 per pip?
1.0850 minus 15 pips is 1.0835. The gap is 15 pips x ₦16,000 = ₦240,000.
You place a stop order 25 pips above 1.0850. What entry price does that give, and what is the 25-pip gap worth on one standard lot at ₦16,000 per pip?
1.0850 plus 25 pips is 1.0875. The gap is 25 pips x ₦16,000 = ₦400,000.