Order types & execution
The full order-type zoo, what trading actually costs, and the habits that keep execution cheap.
The order-type zoo
| Order type | What it does | Use when |
|---|---|---|
| Market | Fills now at whatever the book offers | Immediacy matters more than price |
| Limit | Fills at your price or better, or rests | Price matters more than immediacy |
| Stop-market | Becomes a market order when price hits trigger | Protective exits that must fill |
| Stop-limit | Becomes a limit order at trigger | Exits where you cap the fill price (may not fill!) |
| OCO | Two orders; one filling cancels the other | Bracketing: take-profit + stop together |
| Post-only / reduce-only | Rejects if it would take / increase | Guaranteeing maker fees / only closing |
Why is a stop-limit dangerous as a protective stop in a fast market?
What does an OCO (one-cancels-other) order let you do?
What trading actually costs
Every strategy pays four taxes: explicit fees (maker/taker), the spread, slippage, and — for perp traders — funding. Beginners obsess over the first and ignore the rest; the rest are usually bigger.
Fees compound brutally with frequency. A strategy that trades daily at 10bps round-trip pays ~36% of capital per year in fees alone. High-frequency edges must be enormous to survive their own costs.
A strategy trades once a day at ~10bps round-trip cost. Roughly what does it pay per year in costs?
Execution tactics
Good execution is a checklist, not a talent. Before any order: know the liquidity (can this market absorb your size?), choose maker vs taker deliberately, and if the position is large, slice it — several smaller orders over minutes beat one block through the book.
Place stops where the trade thesis is invalidated, not at round numbers. Obvious levels — round numbers, prior swing lows — are where clustered stops sit, and fast wicks routinely sweep them before price reverses.
Why avoid placing stops at obvious round numbers or prior swing lows?