Definition
A Futures order is an instruction you give your broker on how to buy or sell a contract. The three most common types—market, limit, and stop—help you control the price, timing, and conditions of your trade. Each order type offers different advantages depending on your goals and the market environment.
Why order types matter
Knowing how to place a futures trade is more than just clicking “buy” or “sell.” The type of order you choose affects how quickly you get in, at what price, and how well you manage risk.
The right order type helps you:
- Enter or exit at specific price levels
- Avoid chasing bad fills in fast markets
- Protect your downside or lock in gains
- Stay disciplined without staring at charts all day
Let’s walk through the three core order types: market, limit, and stop orders, plus how and when to use each one.
Market orders: Fast but less precise
A market order tells your broker to buy or sell a contract right away at the best available price.
- Buy market orders fill at the lowest ask
- Sell market orders fill at the highest bid
This is the fastest way to enter or exit a trade. In a liquid market, fills happen almost instantly. It’s great when timing is more important than price, like during a breakout or when closing a position fast.
But be careful: market orders do not guarantee price. In fast-moving or thin markets, your order might fill at a worse-than-expected level. This is called slippage.
Example:
You submit a market order to buy 1 Micro Crude Oil (/MCL) contract when prices are hovering near $75. By the time the order fills, you get $75.12 instead. That 12-cent difference may seem small, but remember: each tick in /MCL is $1, so it adds up quickly if you’re trading size or in volatile conditions.
Limit orders: More control, less speed
A limit order lets you name your price.
- A buy limit order will only fill at your set price or lower
- A sell limit order will only fill at your set price or higher
This gives you control over price and helps prevent overpaying or underselling. But there’s a tradeoff: if the market never hits your price, your order stays unfilled.
Limit orders are ideal when:
- You want to enter at a better price than the current market
- You’re willing to wait for the market to come to you
- You’re placing bracket orders to take profit
Example:
You want to buy 2 /MCL contracts if the price dips to $74.50. You place a buy limit order at that level. If the price never drops that far, your order will sit unfilled.
This is great for control, but if you’re too far from the market, you might miss the move entirely.
Stop orders: Trigger-based risk control
A stop order becomes active when price reaches your chosen level. Think of it like a trigger.
- A buy stop is placed above the current market price
- A sell stop is placed below the current market price
These are often used to protect against losses or enter on momentum. Once triggered, the stop order acts like a market order and fills at the best price available up to a protection limit.
Example:
You’re long 2 /MCL contracts from $74.75. To protect your downside, you place a sell stop order at $73. If crude drops to $73, your stop triggers and submits a sell order. But if the market gaps quickly to $72.80, your fill could be worse than expected, or the order may partially fill depending on exchange rules.
Stop orders help automate exits, but they’re not guaranteed to fill at your exact stop price.
Real-world scenario: Combining all three
Let’s say you’re bullish on oil and want to scale into a position.
- You buy 2 /MCL contracts at market near $75.00 to enter fast
- You place a limit order to buy 2 more at $74.50 if price dips
- You add a stop order at $73.00 to protect your total position
If price rallies, you’re in early. If prices pull back, you average in. If price crashes, your stop limits your downside. These tools work best together, not in isolation.
Understanding placement: Where to set your orders
Here’s a quick reference for where each type of order is typically placed in relation to the current market price:
Order Type |
Common Placement |
Buy Market |
At current ask |
Sell Market |
At current bid |
Buy Limit |
Below current market price |
Sell Limit |
Above current market price |
Buy Stop |
Above current market price |
Sell Stop |
Below current market price |
Let’s break that down with examples:
- A buy market order fills at the best available ask price. You’re accepting the current price to enter the trade right away.
- A sell market order fills at the best available bid price. You’re exiting quickly, even if it means taking a slightly lower price.
- A buy limit order is placed below the current price, aiming to get in at a discount. If the market drops to your limit price, the order will trigger and fill at that price or better.
- A sell limit order is placed above the current price, allowing you to sell at a higher level than where the market is now. If the market rises to your limit, the order may fill and lock in gains.
- A buy stop order is placed above the current market price. It’s often used to enter during a breakout or protect a short position. Once triggered, it becomes a market order.
- A sell stop order is placed below the current price and is commonly used to cut losses or enter on downside momentum. It also becomes a market order once triggered.
Placing these orders incorrectly can result in unexpected executions or rejections. For example, placing a buy limit above the current price will execute immediately, just like a market order, because you’re offering to pay more than the ask. Similarly, a sell stop above market will usually be rejected since it makes no logical sense based on how stop orders function.
Understanding the correct placement of each order type helps ensure your trades behave the way you intend. It’s a critical skill for managing risk and executing strategies with confidence.
Bid and ask: How prices are matched
The bid is what buyers are offering.
The ask is what sellers are demanding.
The difference between the two is the spread.
- Market buy orders fill at the ask
- Market sell orders fill at the bid
In tight markets (like /MES or /MCL during active hours), the spread might be just 1 tick. In thin or volatile markets, spreads can widen, making market orders less favorable.
How size and volume impact your fill
Size and volume affect how easily your order gets filled.
- Volume shows how many contracts have traded today
- Size refers to how many are currently available at each price level
If you place a large order in a thin market, you may get filled across multiple price levels, causing slippage. This is more common with market or stop orders. With limit orders, a large size may stay partially unfilled if there aren’t enough contracts at your price.
Time in force: How long your order lasts
Each order needs a time in force, which defines how long it stays active:
- Day Order (DAY): Expires at the end of the trading day
- Good Till Canceled (GTC): Stays open until filled or manually canceled
For example, if you place a GTC buy limit order on /MCL at $74.50, it could sit for days waiting for price to drop. If it never hits, the order stays in place until you cancel it or the contract expires.
Key takeaway
Knowing how to use market, limit, and stop orders is essential to trading futures effectively. Each type plays a different role:
- Market orders are best for speed
- Limit orders are best for price control
- Stop orders are best for risk management
Successful traders mix and match these tools depending on the strategy, market conditions, and their risk tolerance. With a little practice, you’ll know which to use and when.
Now that you know how to place orders, it’s time to explore what direction you’re trading. In the next article, we’ll break down what it means to go long or short in futures, how each position works, and how traders profit from rising or falling markets.
Next lesson: What Does It Mean to Go Long or Short in Futures? →
Frequently Asked Questions
What are the main types of futures orders?
The three primary futures order types are market, limit, and stop orders. Each one helps control how your trade is executed based on speed, price, or specific triggers.
What is a market order in futures trading?
A market order tells your broker to buy or sell a futures contract immediately at the best available price. It’s fast, but you have less control over the exact price you receive, especially in volatile or illiquid markets.
How does a limit order work in futures?
A limit order sets a specific price where you’re willing to buy or sell. It ensures price control, but there’s no guarantee your order will fill if the market doesn’t reach your set level.
When should I use a stop order?
Stop orders are commonly used to manage risk. A sell stop helps cut losses on a long position, while a buy stop can enter a trade during a breakout or protect a short position. They trigger once the market hits a defined price.
What’s the difference between Day and GTC orders?
A Day order expires at the end of the trading day if not filled. A Good-Til-Canceled (GTC) order stays active until it’s either filled or manually canceled, making it useful for long-term limit strategies.
How do bid-ask spreads and order size affect my fills?
Tighter spreads lead to more efficient fills. In low-volume markets, large orders or market orders may cause slippage where your trade fills at multiple price levels. Using limit orders can help reduce this risk.