Market orders limit orders and slippage

Understand what an order requests and what it cannot guarantee when currency prices move quickly.

Market orders prioritise execution

A market order requests execution at the available market price under the venue’s rules. It does not promise the last price shown on a chart. A fast market, a large order or limited liquidity can produce a fill that differs from the expected price.

That difference is called slippage. It can be favourable or unfavourable. A displayed quote, the moment an order is sent and the moment it can be matched are distinct observations. Record all three when evaluating execution.

Limit orders constrain price

A buy limit states the highest acceptable purchase price. A sell limit states the lowest acceptable sale price. A limit order can protect the price boundary while leaving the order unfilled. Touching a level on a chart does not prove your order would have executed there.

Other orders may be ahead in a queue, available size may be insufficient, and the displayed chart may represent a different side of the quote. Some orders can fill partially. The unfilled remainder must be managed according to its duration and venue rules.

Stops depend on their activation rules

A stop instruction becomes active when a defined condition is met. Depending on the product, the activated instruction may behave as a market order, a protected market order or a limit order. Read which quote triggers it and what happens after activation.

A stop is therefore not a universal guarantee of the maximum loss. In a gap, the next executable price can be beyond the intended level. A stop limit can remain unfilled if the market moves past its limit. Guaranteed stop products, where offered, have separate terms and costs.

Match the instruction to the problem

Consider a hypothetical long EUR/USD exposure with a planned exit around 1.0950. If the next available bid is 1.0920, an ordinary stop execution may occur below the intended level. The position size calculation should acknowledge that possibility rather than assuming a perfect fill.

Before submitting any order, identify the instrument, direction, units, trigger, limit if any, duration and cancellation behaviour. Confirm the result afterwards. An order acknowledgment says the instruction was received, while an execution confirmation states what actually traded.

Check your understanding

A sell stop limit activates during a sharp fall, but the market immediately trades below its limit. Has the order necessarily closed the exposure?

See the answer

No. The activated limit order may remain unfilled. It restricts the sale price but does not guarantee an exit when no buyer is available at that price or better.