Order Types

Market Orders

A market order is an instruction to execute the trade immediately at the best available price in the market, with no restriction on the execution price. As confirmed by FINRA's order types resource, the market order is the most common type of investor order and brokerage firms typically enter orders as market orders unless the investor specifies otherwise. The market order provides certainty of execution — it will be filled as long as a market exists — at the cost of price certainty, because the investor receives whatever price the market currently offers.

Market orders are most appropriate for highly liquid securities in calm market conditions where bid-ask spreads are narrow and the execution price will be close to the last quoted price. They are least appropriate for illiquid securities, in volatile market conditions, or when a specific price is important to the investor's strategy. 

Market orders placed when markets are closed execute at the opening price when trading resumes — which may differ dramatically from the prior closing price if material news occurred overnight. The entry on Market Order in this dictionary covers this topic in full detail.

Limit Orders

A limit order is an instruction to execute the trade only at the specified limit price or better — buy limit orders execute at or below the limit price, and sell limit orders execute at or above the limit price. The limit order provides price certainty at the cost of execution certainty — it may go unfilled if the market never reaches the specified price.

A buy limit order is placed below the current market price. If XYZ stock is trading at fifty dollars and an investor places a buy limit at forty-seven dollars, the order sits in the book until the price falls to forty-seven dollars or below — at which point it executes. A buy limit is never placed above the current market price because it would execute immediately at the current price, making the limit meaningless.

A sell limit order is placed above the current market price. If XYZ stock is trading at fifty dollars and an investor places a sell limit at fifty-three dollars, the order sits in the book until the price rises to fifty-three dollars or above — at which point it executes. A sell limit is never placed below the current market price for the same reason.

The mnemonic BLISS — Buy Limit or Sell Stop — identifies the two order types placed below the current market price. The mnemonic SLOBS — Sell Limit or Buy Stop — identifies the two order types placed above the current market price. These mnemonics are among the most widely used memory tools for Series 7 order type questions. As confirmed by both Achievable's Series 7 curriculum and the classic Series 7 For Dummies framework, BLISS orders are entered at or below the market price and SLOBS orders are entered at or above the market price. BLiSS orders are also reduced on the ex-dividend date — buy limits and sell stops receive a downward price adjustment equal to the dividend amount when a stock goes ex-dividend, reflecting the mechanical price drop that typically accompanies the ex-dividend date.

The entry on Limit Orders in this dictionary covers this topic in full detail, including FINRA Rule 5320's prohibition on trading ahead of customer limit orders and Regulation NMS Rule 611's order protection rules.

Stop Orders

A stop order — also called a stop loss order — is an instruction that remains dormant until the market price reaches or passes through a specified stop price, at which point the stop order is triggered — also called elected — and immediately becomes a market order for execution at the next available price. The stop order is the order type that feels counterintuitive to many students because sell stops are placed below the current market and buy stops are placed above the current market — the reverse of limit orders.

As confirmed by FINRA's order types resource, a stop order is an order to buy or sell a security once the price of the security reaches the specified stop price, at which point the order automatically turns into a market order and is executed as soon as possible.

A sell stop order is placed below the current market price. An investor holding XYZ stock at fifty dollars might place a sell stop at forty-six dollars to limit potential losses — if the price falls to forty-six dollars, the stop triggers, becomes a market order, and sells at the next available price which is approximately forty-six dollars. The sell stop protects a long position by automatically selling if the price declines to a predetermined level, limiting the loss to approximately four dollars per share plus any slippage below the trigger price.

A buy stop order is placed above the current market price. An investor who has sold XYZ stock short at fifty dollars might place a buy stop at fifty-four dollars to limit potential losses on the short position — if the price rises to fifty-four dollars, the stop triggers and buys shares to cover the short, limiting the loss to approximately four dollars per share. Buy stops can also be used by investors who want to enter a long position once a stock demonstrates upward momentum by breaking through a resistance level — the buy stop purchases shares automatically when the price reaches a specified level.

The critical characteristic of a stop order is that it guarantees triggering when the stop price is reached — but it does not guarantee the execution price after triggering. Because the stop becomes a market order at the moment of triggering, the execution can occur at any price available in the market after the stop price is reached. In a rapidly falling market, a sell stop triggered at forty-six dollars might execute at forty-four or forty-three dollars if the market is moving quickly through multiple prices in sequence. This gap between the trigger price and the execution price — called slippage — is the primary risk associated with stop orders in volatile markets.

Stop-Limit Orders

A stop-limit order is a hybrid that combines a stop order and a limit order — it triggers at the stop price just like a regular stop order, but instead of becoming a market order at that point, it becomes a limit order with the specified limit price. The stop-limit order provides price certainty after the trigger at the cost of execution certainty — once triggered, it may not execute if the market moves through the limit price without filling the order.

The stop-limit order is specified with two prices — the stop price at which it triggers and the limit price at which it will execute. As confirmed by Series 7 For Dummies and the Achievable curriculum, a sell stop limit order places a stop at one price and a limit at a lower price — the order triggers when the market reaches the stop price and then executes only at or above the limit price.

A concrete example illustrates the mechanism. An investor places a sell stop limit order for XYZ stock with a stop at forty-three dollars and a limit at forty-two dollars and ninety cents — written as a sell stop at 43 limit 42.90. The stop triggers when the price falls to forty-three dollars or below. 

At that point the order becomes a sell limit at forty-two dollars and ninety cents. If the next trade is at forty-two dollars and ninety-five cents, the order executes — forty-two and ninety-five is above the forty-two-ninety limit. 

If the market falls directly through forty-two-ninety to forty-two-eighty-five without trading at or above the limit, the order does not execute and the investor remains in the position. 

The stop-limit prevents the execution at an unacceptable price but introduces the risk that no execution occurs at all.

Stop-limit orders are used when investors want the protection of a stop but are unwilling to accept execution at whatever market price follows — they would rather not sell at all than sell below the limit price.

Time-in-Force Specifications

Every order is accompanied by a time-in-force instruction specifying how long the order remains active if not immediately executed. The most commonly tested time specifications are as follows.

A day order expires at the close of the regular trading session — four PM Eastern Time — if not executed. It is the default time-in-force instruction applied to most orders unless the investor specifies otherwise. Market orders are always day orders by default.

A good-till-cancelled order — GTC — remains active until it is either executed or explicitly cancelled by the investor, regardless of how many trading days pass. As confirmed by FINRA's time parameters resource, brokerage firms typically set a maximum duration for GTC orders — often ninety or one hundred and eighty days — after which the firm cancels the order automatically. Investors must monitor GTC orders carefully because an order placed weeks ago may execute at an unexpected moment if the market finally reaches the specified price during a volatile session.

GTC orders that are BLISS orders — buy limits and sell stops — are adjusted on the ex-dividend date by reducing the order price by approximately the dividend amount, reflecting the price drop that accompanies the ex-dividend date. SLOBS orders — sell limits and buy stops — are not adjusted, because these orders are placed above the market and the ex-dividend price drop would move the market further away from them rather than triggering them unexpectedly.

Quantity Specifications — Partial Fill Rules

When a large order cannot be filled entirely at a single price or moment, the investor may specify instructions governing whether partial fills are acceptable.

An all-or-none order — AON — specifies that the entire order must be filled at the specified price or the order will not execute at all. However, unlike fill-or-kill, all-or-none does not require immediate execution — the broker may make multiple attempts over time to fill the full quantity at the specified price. AON orders remain open until the complete quantity is available at the stated price or the investor cancels them.

A fill-or-kill order — FOK — is the most stringent specification, requiring the entire order to be filled immediately — not just some portion of it — or the entire order is cancelled on the spot. As confirmed by FINRA's time parameters resource, with an FOK order the firm will execute the entire order immediately or not at all. FOK orders are used primarily by institutional investors executing large block transactions where partial fills create operational complications.

An immediate-or-cancel order — IOC — requires immediate execution of as much of the order as possible at the specified price, with any unfilled portion immediately cancelled. Unlike FOK which requires the entire order or nothing, IOC accepts partial fills and cancels only the remainder. An IOC buy limit at fifty dollars for one thousand shares with only six hundred shares immediately available at fifty executes for six hundred shares and cancels the remaining four hundred immediately.

The SLOBS and BLISS Framework — The Series 7 Memory Tool

The SLOBS and BLISS mnemonic framework is the most widely used memory tool for Series 7 order type questions and is confirmed by multiple Series 7 examination preparation sources as the standard method for rapidly determining where each order type sits relative to the current market price.

BLISS — Buy Limit or Sell Stop — are orders placed below the current market price. Buy limits are below because investors seek to buy at a lower price than currently available. Sell stops are below because they protect long positions from downside price movement.

SLOBS — Sell Limit or Buy Stop — are orders placed above the current market price. Sell limits are above because investors seek to sell at a higher price than currently available. Buy stops are above because they either protect short positions from upside price movement or capture momentum breakouts above a resistance level.

BLISS orders — buy limits and sell stops — are reduced on the ex-dividend date by the dividend amount. SLOBS orders — sell limits and buy stops — are not reduced.

Examination Relevance and Key Takeaways

Order types are tested extensively on the SIE, Series 7, and Series 65 examinations covering market order execution mechanics, limit order price guarantees, stop order triggering and election, stop-limit hybrid mechanics, time-in-force specifications, and partial fill qualifiers.

The key points to retain are these.

Market orders execute immediately at the best available price — certainty of execution, no certainty of price. Limit orders execute only at the specified price or better — buy limits at or below the limit, sell limits at or above the limit — providing price certainty without execution certainty. Stop orders trigger when the market reaches the stop price and then become market orders — sell stops are placed below the market to protect long positions, buy stops are placed above the market to protect short positions or capture breakouts. Stop-limit orders trigger at the stop price and then become limit orders rather than market orders — providing price protection after triggering at the cost of possible non-execution.

BLISS — buy limit or sell stop — are placed below the current market price and are adjusted downward on the ex-dividend date. SLOBS — sell limit or buy stop — are placed above the current market price and are not adjusted on the ex-dividend date. Day orders expire at the close of the trading session. GTC orders remain active until executed or cancelled, subject to firm-imposed maximums. All-or-none requires full quantity at the specified price with multiple fill attempts permitted. Fill-or-kill requires the entire order filled immediately or the entire order is cancelled. Immediate-or-cancel fills as much as possible immediately and cancels the remainder.