The different types of orders available at NBDB

08 April 2025 by National Bank Direct Brokerage

An investor is looking at a stock market screen.

Do you know the difference between a buy limit, sell limit, or stop loss order? If you're not sure, this article will help! We’ll explore the most commonly used trading orders, how they work, and the pros and cons of each approach. Understanding when and how to use different order types can help self-directed investors make more informed investment decisions and better manage their portfolios.

In this article

Understanding the different types of orders in stock trading
Market orders
- Risks of placing a market order when the markets are closed
Limit orders
Stop orders
- Buy stop orders

Investors buy or sell securities by issuing an order to a trading venue. The venue can be an online brokerage platform like NBDB or an individual licensed broker. An order is an instruction to buy or sell a security, such as a stock, ETF, or option at a specific price or when certain conditions are met.

Understanding the stock order process is critical to online trading and the self-directed investing journey. Choosing the right order type can help manage risk, secure better pricing, and ensure that trades align with an investor’s strategy and goals.

Understanding the different types of orders in stock trading

There are three primary types of stock orders:¹

Market orders
Limit orders
Stop orders

A market order allows investors to buy and sell stocks and ETFs at posted prices. In contrast, limit and stop orders provide more control by allowing investors to set a predefined price for buying or selling.

Since financial markets can be volatile, trading orders can help investors automate part of the trading process and execute trades strategically.

What is a market order?

A market order is the simplest type of order. It instructs the broker to buy or sell a security immediately at the best available price.

As long as the market is open, market orders are typically executed right away. If you place a market order outside of trading hours, the order will be executed at the opening of the market on the following trading day and at the new, current bid/ask price.

With market orders, investors don't control the exact price at which the trade is executed. The difference between the security’s last quoted bid/ask price and the price at which the order is filled is known as slippage. This means there will typically be a discrepancy in the price between when the order is placed and when the order is executed.²

Slippage tends to be more significant with fast-moving markets, where stock prices change quickly, and with less liquid stocks, where the last trade may have happened minutes or hours earlier.³

However, under normal market conditions and during regular trading hours (9:30 am to 4:00 pm EST), the execution price will usually be close to the stock's current bid or ask price.

You might consider a market order when:

Speed is a priority - If your goal is to execute a trade quickly and you are not concerned with obtaining a specific price.
The security is highly liquid - Heavily traded stocks and ETFs typically experience minimal price slippage.

Risks of placing a market order when markets are closed

While market orders offer speed and simplicity, there are risks when placing them after market hours:

After-hour market behavior- Security prices may not reflect real-time news, earnings reports, or other events that could affect the price.
Price gaps - Overnight market changes can lead to price differences when the market reopens. This phenomenon is known as a gap. A market order placed when the market is closed will be executed when markets reopen and trading resumes. This can result in a significantly different price than expected.
Low-volume stocks - Certain listed companies have very low daily trading volumes. Thinly traded stocks may experience large price swings with a single order. A limit order may be a better choice in such cases.
Limited liquidity - If funds are limited, a limit order is preferable to avoid purchases beyond the budget.

What is a limit order?

A limit order allows investors to buy or sell a security at a specific price or better. Unlike market orders, which execute immediately at the best available price, limit orders will only be executed if the price meets or is more favorable than the investor’s predefined conditions.

Buy limit order – Executes at or below the specified price.
Sell limit order – Executes at or above the specified price.

If the security does not reach the target price, the order remains unfilled. A limit order can be valid for 1 day or multiple days (at NBDB it can be placed up to 60 days out).

When to use a limit order?

Choosing between a market or limit order depends on your primary concerns: Is it price, trading quickly, or missing out on a trade? A limit order usually results in a better price than a market order, but if the security doesn't reach the predetermined price, the order purchase or sale will not convert into a trade.

Price control is important – Limit orders help investors avoid overpaying when buying or selling too low.
Trading illiquid securities – Some stocks have wider bid-ask spreads, making price control more critical.

While limit orders provide price protection, they do not guarantee execution. If the market price does not reach the limit price, the trade will not occur.

How to place a buy order and a buy limit order

What is a buy limit order?

A buy limit order ensures that a security is purchased at or below the specified or limit price, which is below the current price of the security.

You might consider a buy limit order when:

You want to buy a security only at a specific price or below, such as buying a stock once it has dipped to a desired level.
You want to buy a security at a price lower than the current market price and, therefore, avoid overpaying by specifying a maximum purchase price.

What is a sell limit order?

A sell limit order ensures that a security is sold at or above a specified price which is higher than the current price of the security.

You might consider a sell limit order if:

You want to sell a stock once it reaches a predetermined target price, locking in profits.

What is a stop order?

A stop loss order, also referred to as a stop order or a sell stop order, is used to sell a security when its price falls to a specific level. It helps investors limit their losses or lock in part of their gains in a declining market.

Once the stop price is reached, the stop order converts into a market order to sell, and executes when the market price reaches the predetermined stop price. Investors use stop loss orders to limit losses and secure the gains they may have generated if the share price decreases.

You might consider a stop loss order when:

You want to limit losses – A stop-loss order automatically sells a position to reduce potential losses or downside risk as part of an exit strategy.
You want to protect profits – Investors use stop orders to protect gains from a rising stock before a downturn. It is a way to manage risk when markets become volatile.

How to place a stop loss order

What is a buy stop order?

A buy stop order triggers a purchase when the stock price reaches a specified level that is typically above the current market price. The buy stop order will be filled at the next available price on the market.

Investors who are short selling will often use buy stop orders to protect and hedge against the risk that the stocks that they are shorting will go up rather than down in value. If the short seller feels that there is a risk that they can't buy back the shares at a lower price, they can at least limit their losses by using a buy stop order.

Consider a buy stop order if you want to buy after a stock breaks above a resistance level to capture upward momentum, or if you need to cover a short sale, reducing the risk of significant losses if the stock price rises.

Understanding the differences between market, limit, and stop orders is fundamental to developing and executing a sound trading strategy that aligns with your investment goals. Each order type serves a specific purpose, and selecting the right one depends on factors like price control, timing, and risk management. By selecting the right order type at the right time, investors can navigate the markets more effectively and make more considered and informed investment decisions.

Stock trading orders fall into three main categories: market, limit, and stop orders.
A market order is the most basic type of trading order. It instructs the broker to buy or sell a security immediately at the best available price on the market.
A limit order, like a buy limit or sell limit order, is an order to buy or sell a security only at a specific preassigned price or better.
A stop loss order, also known as a stop or sell stop order, is an order to sell a security when its price falls to a specific level. It helps investors limit their losses in a declining market.
A buy stop order is an order to purchase a security once its price reaches a specified value, typically above the current market price.

Sources

Welcome to national bank direct brokerage and thank you for joining us to learn how to place a buy order on our trading platform. Once signed in you will notice four buttons on the right-hand side of the page, one of which is the buy button. Please note that they will always be present regardless of which section you navigate to.

By clicking on the buy button a trade ticket will appear, let’s take a few moments to look over the trade ticket. We can change it to sell from buy, we can select the account that we wish to make the purchase in. Once selected the cash balance is now shown and in our case this is a margin account. We also have the buying power as well.

The default setting for the type of investment is stocks and etfs but from the same trade ticket you can also trade investment funds previously known as mutual funds, options and fixed income securities as well.

The next step is to type in the name or symbol of the security you want to purchase for our example we will select National Bank of Canada symbol NA and once selected you will notice that the trade ticket has become a lot more active. I now have a full name and symbol and the flag before the symbol shows you the security trades on a canadian or u.s exchange.

On the right hand side of the trade ticket we have a real-time quote with the bid and ask price and number of shares available at that price and other useful information that can be refreshed by clicking here. Now the next step is to indicate the quantity which will be one share.

NBDB clients can also select the condensed version of the trade ticket by clicking on the double arrows shown here. One advantage of this view is that you can continue to navigate throughout the platform while having the trade ticket open. Also by clicking here you can minimize it as well to free up additional space.

Now if you wish to go back to the default view simply click on the double arrows again.

Going back to our transaction the next step is to select the price type clients of national bank direct brokerage have three options. The two most commonly used are market and limit orders.

Let's begin with limit order or limit price which allows the investor to specify the maximum price that they are willing to pay to purchase the security. In other words you want to purchase a security at a price that is less than the current price. This also means that there is a chance your order may not go through if the security doesn't reach your price.

Let's go ahead with our example, currently National Bank is trading at about 90 dollars but let's say that 87 is the max price that I want to pay. In the limit box i'll type in 87 and then i'd need to select how long the order is good till, by default it's a day order but I can select a specific date up to 60 days out.

Click on the calendar icon to select your date then submit the order. A new screen will then pop up called order summary which will give you a second chance to review the order. On the right hand side you'll notice that the approximate transaction value is shown and our zero commission pricing.

If everything is correct, then the last step is to click on confirm and send order. If actually sent the order will remain open until it's filled or will expire if the price isn't reached now let's go back to our trade ticket so we can place a market order.

This time the price type will be at market a market order means you want to purchase your stock right away at the current market price. Click on submit and we are now in the order summary which we've already viewed. If no changes are required, then we simply click on confirm and send order. We are now in the current orders window and here we have our order that has been filled and at which price.

Let's also go to our account holding section where we can see that our one share is now included in the portfolio. This concludes our video on how to make your first purchase with national bank direct brokerage for any additional information please view our other youtube videos or reach us by our secure messaging center

Welcome to National Bank Direct Brokerage. This video will show you how to place a stop loss order on the NBDB platform. First, let’s define what a stop loss order is. It's an order that triggers the sale of a stock when its price reaches a certain value.

Investors use stop loss orders for two reasons: to limit the amount of a potential loss on a security or to protect an unrealized gain on an existing holding.

Let’s look at a visual example of a stop loss order being placed to limit a potential loss. Here we have the chart of the X-I-C Exchange Traded Fund and let’s assume the shares were purchased at the price of $32,50. To protect the investor in the event that the share price drops. A stop loss order will be placed at the price of $31.50, a $1 dollar difference which represents a 3% price drop. If the price declines to $31.50 or lower the stop loss order will be triggered which will activate the order into a market order to sell the shares immediately.

Now let's say that before the market opens the following day there is some highly negative news in the market which causes the ETF to open at $30 or lower. The stop loss order would have been automatically triggered and the shares would have been sold but not at $31.50 but at $30.00 or lower. Some investors might be happy that the shares were sold but others might have preferred to simply hold on to the shares than sell them at the lower price.

To avoid such a scenario, a stop loss order will also have a limit price.

The addition of a stop-loss limit price allows the investor to determine the minimum price at which the stock can be sold. In other words, the stop-limit price is essentially the share price below which the investor would rather hold onto the shares than sell them. In our example our investor could have set a stop loss order with a limit price of $31.00.

How you determine the stop loss price depends on your trading strategy, holding period and the volatility of the shares. Note that the closer the stop loss price is to the market price, the greater the chances of your order being triggered.

Let’s show an example using a transaction ticket but this time the investor wants to place a stop loss order to protect an unrealized gain. We're currently in the account holdings section, and the second stock in the account is Alimentation Couche-Tard.

The stock is currently trading at $76.80 a share and our investor would like to set a stop loss at $75 a share. The first step in placing a stop loss order is to click on the sell button located on the right-hand side of the holdings and a transaction ticket will open. You will notice that it’s been partially filled with the symbol, number of shares and account type where the shares are in, which will save you a few steps.

All the fields can be modified and the bid and ask prices can be refreshed by clicking on the double arrow icon shown here.

Next, we click on the Price Type and change it from at market to Stop loss from the dropdown menu. Then we need to add our trigger price of $75 which if reached will become a market order.

Next to it we have the limit price box, our investor needs to decide what the limit price is. Let’s go ahead with $73.00, this means the minimum price that the investor would be willing to sell their shares at. Below this price they’d rather hold onto them.

We then select how long the order will be good till, in other words, the order's expiry date. It can be valid for one day or up to 60 days. Once this has been done, all that's left is to click on Submit.

An Order Summary window will appear, allowing the investor to review the order and make any changes by clicking on the Modify button, if not click on Confirm & Send Order. Here we can see that the order is open with our instructions. As long as its status remains open, the order can be modified or canceled at any time.

To view the order, our investor can go to the Activities heading and then select Current orders from the dropdown menu.

This concludes our video on how to place a stop loss order on the NBDB platform.

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