The mechanics of entering and exiting trades
The three order types every trader needs to understand
Before you ever place a trade, you need to understand exactly what happens when you click buy or sell. Different order types serve different purposes, and using the wrong one at the wrong time can cost you money before the trade even starts.
Market Order
Executes immediately at the current best available price. You get in right now, but you accept whatever price the market gives you. Fast but potentially costly during volatile moments.
Gold is at 5,620 and dropping fast. You hit 'sell' with a market order. You get filled at 5,619.50 — close enough during calm conditions, but during news you might get 5,615.
Limit Order
Sets your desired entry price in advance. The order only fills when price reaches your specified level. You get the price you want, but it might never be reached.
Gold is at 5,620. You think it will pull back to 5,600 before going higher. You set a Buy Limit at 5,600. If price reaches 5,600, you're in. If it never pulls back, the order expires unfilled.
Stop Order
Becomes a market order when price reaches a specified level. Used for stop-losses (exit if price goes against you) or stop-entries (enter when price breaks through a level).
You're long gold at 5,620 with a Stop Loss at 5,590. If price drops to 5,590, your position closes automatically — limiting your loss to 30 points.
| Situation | Order Type | Why |
|---|---|---|
| You've identified your entry level in advance | Limit Order | Precision entry at the price you want — standard for SMC trading |
| Price is moving fast and you need to get out NOW | Market Order | Speed over price — when protecting capital is more important than getting a perfect fill |
| Protecting an open position | Stop Loss (Stop Order) | Automatic exit if price moves against you — NEVER trade without one |
| Entering on a breakout confirmation | Stop Entry (Buy/Sell Stop) | Automatically enters when price breaks through a level, confirming the move |
Every single trade must have a stop loss. No exceptions. Not 'I'll watch it closely.' Not 'I'll exit manually.' A hard stop loss, placed before you enter, every time. This is the line between trading and gambling.
When you look at a gold price quote, you actually see two prices. The bid (the price at which you can sell) and the ask (the price at which you can buy). The difference between them is called the spread — and it's a cost you pay on every trade.
On gold, ECN spreads typically range from 0.0 to 1.1 pips during active sessions. During low-volume periods (Asian session, around news releases), spreads widen significantly — sometimes to 3-5 pips or more. This is why timing matters: wider spreads eat into your profits before the trade even moves in your favor.
Why is a limit order generally preferred over a market order for planned entries?