Spain
Mexico
Brazil
Poland
Taiwan
Philippines
South Korea
The essentials
- Market orders prioritize execution; limit orders constrain the price of any fill.
- A stop price triggers an order and does not guarantee its execution price.
- Define the slippage benchmark before adding costs, so spread is not counted twice.
Execution certainty and price control
A market order seeks execution against available prices. The last traded price, or a quote briefly shown on screen, does not reserve that price for your entire quantity. Available size can change before the order arrives, and trading halts or missing liquidity can interrupt execution even when the order has no price limit.
A buy limit sets the highest acceptable execution price; a sell limit sets the lowest. That protection applies to fills, not to whether a fill occurs. A displayed price touching the limit is insufficient if available quantity is consumed by earlier orders. The result may be a partial fill or no trade.
A stop is a trigger
A conventional stop order becomes a market order after its trigger condition is met. If a market gaps through a sell stop, the eventual sale can occur substantially below the stop price. The word stop therefore describes activation; it does not establish a fixed maximum loss for the position.
A stop-limit activates a limit order instead. It preserves the specified price condition, but a gap beyond that limit can leave the position unsold. Check whether the provider triggers from trades or quotations and which sessions count. Identically named orders can follow different venue or broker rules.
Calculate the average of several fills
Consider a hypothetical market purchase of 100 units with an initial ask of $100. Only 40 units fill at $100; the remaining 60 fill at $100.50. Their costs are $4,000 and $6,030. Dividing the $10,030 total by 100 units gives a quantity-weighted average execution price of $100.30.
Against the stated $100 benchmark, adverse slippage is $0.30 per unit, or $30 overall before fees. Simply averaging the two prices would ignore their different quantities. When reviewing an actual execution, record the benchmark timestamp and quote type as well, so comparisons between orders use a consistent measurement.
| Fill | Quantity | Unit price | Cost |
|---|---|---|---|
| First fill | 40 | $100.00 | $4,000 |
| Second fill | 60 | $100.50 | $6,030 |
| Total / weighted average | 100 | $100.30 | $10,030 |
Keep spread and slippage distinct
The bid is a buying quote and the ask is a selling quote; the difference between the best simultaneous ask and bid is the spread. Slippage instead measures execution against a chosen reference price. These describe different comparisons, even when both matter to the economics of a transaction.
With a hypothetical bid of $99.80 and ask of $100, the spread is $0.20 and midpoint $99.90. The earlier $100.30 fill average is $0.30 above the ask but $0.40 above midpoint. That midpoint comparison already includes half the initial spread. Adding the full spread again would double-count part of the cost.
Read the order record
Read side, quantity, order type, limit or trigger, and expiry together. An acknowledgement of submission is not evidence of a completed trade. Where there are partial fills, distinguish filled quantity from remaining quantity and check whether that remainder is still working, has expired, or has been canceled.
After execution, reconstruct the average from individual fills and reconcile explicit fees separately. SEC and FINRA descriptions concern securities orders; another product or platform may implement similar labels differently. The practical check is the provider's order specification and final execution record, not the label alone.
Official sources
An explanation of financial mechanics based on official sources. Hypothetical calculations are not actual trading results or forecasts.
