You place an order for 200 shares in a company trading around £6.40, and by the time the trade actually fills you've paid £6.58. Nothing went wrong in any technical sense — no fat-finger error, no platform glitch, no rejected instruction. You simply used a market order during a quiet summer session where the sellers thinned out after lunch, and the price walked up before your order reached the exchange. That gap, between the price on your screen and the price you actually pay, is exactly what order types exist to manage. Understanding it is the difference between trading like someone who watches a chart and trading like someone who understands what happens in the milliseconds after they press the button.
Market orders: fast, certain to fill, uncertain on price
A market order tells your platform to buy or sell right now, at whatever price is currently available. It's the default on most apps because it's the simplest thing to explain, and for a big, liquid FTSE 100 name during normal trading hours it works exactly as advertised — the spread on Lloyds Banking Group or BP is a fraction of a penny, and the difference between the price you saw and the price you got is trivial. The trouble starts with anything less liquid: an AIM-listed small-cap, a stock in the last twenty minutes before the London close, or any share during the thin patches of late July and August when market-maker books get shallow.
In those conditions, a market order does exactly what it promises — guarantees the fill, never the price — and that's precisely the trade-off you didn't sign up for if you assumed "market order" meant "the price I see." It doesn't. It means the next available price, whatever that turns out to be by the time your instruction reaches the order book.
Limit orders: you set the ceiling, the market decides whether to meet it
A limit order flips the guarantee. You name the price you're willing to pay (or accept, on a sale), and the order only fills at that level or better. Say Lloyds is quoted at 74.1p bid and 74.3p ask, and you place a limit buy at 73.8p. Nothing happens unless the shares genuinely trade down to that level — a passing quote isn't enough, an actual transaction has to occur there. That's the cost of certainty on price: you might wait days, or the order might simply expire unfilled while the stock drifts upward without you.
This is the right tool whenever liquidity is thin or the spread is wide — AIM stocks, investment trusts trading at an unusual discount, anything outside the FTSE 350. Hargreaves Lansdown, AJ Bell and Interactive Investor all support limit orders on standard share dealing accounts, and there's no real reason not to use one on anything you're not desperate to own in the next thirty seconds. Freetrade and Trading 212 have added limit order support too, though the exact mechanics and any minimum tick size differ enough between platforms that it's worth checking your own broker's order ticket before assuming it behaves like the last one you used.
Stop-loss orders: protection with a catch worth knowing about
A stop-loss sits below the current price and triggers a market sell if the share falls to that level, and most people treat it as an insurance policy against a bad position running away from them. It isn't quite that. Once triggered, a standard stop-loss becomes a market order — it guarantees you'll sell, not the price you'll sell at. If a stock gaps down overnight on a profit warning and opens 15% below your stop level, your shares sell at the opening price, not at your stop price. The stop did its job in the sense that it got you out; it did nothing to protect the price you got out at.
Guaranteed stops do exist, but not inside a standard share dealing account or an ISA — they're a feature of spread betting and CFD trading through providers such as IG or CMC Markets, where you pay a premium (built into the spread or charged directly) for the promise that you'll be filled at exactly the level you set, gap or no gap. For a straightforward ISA or SIPP equity holding, that protection simply isn't on the menu, which is worth knowing before you assume a stop-loss on your Hargreaves Lansdown Vantage account behaves like one on a CFD platform.
Where standard stops genuinely help
- Locking in gains on a position that's already run up, where you're comfortable selling at roughly your trigger level rather than exactly at it
- Managing risk on a volatile small-cap you don't want to watch every day
- Removing the emotional decision of "do I sell now" during a fast-moving fall
- Trailing stops that move up with the price, locking in more of the gain the longer a winning trade runs — useful, though not something every platform offers on every instrument
Stop-limit orders: closing one gap, opening another
A stop-limit order tries to solve the market-order problem inside a stop-loss. Instead of triggering a market sell once your stop price is hit, it triggers a limit order at a price you specify. Set a stop at 590p and a limit at 585p on a stock currently at 620p, and if the price falls to 590p, your platform submits a sell order that will only execute at 585p or better. That protects you from the worst of a gap-down — but it introduces a new risk that a plain stop-loss doesn't have: if the price crashes straight through both levels without trading at 585p on the way down, your order simply doesn't fill, and you're left holding a falling stock with no protection at all. It's a genuine trade-off, not a strictly better version of a stop-loss, and anyone telling you otherwise hasn't watched one fail to fill during a fast market.
Day orders versus Good-Til-Cancelled: the setting people forget to check
Every order you place also carries a duration, and this is where a surprising number of UK investors get caught out. A day order expires automatically at the end of the trading session if it hasn't filled — place a limit buy at 9am, and if it hasn't triggered by 4:30pm, it's gone, and you'll need to re-enter it the next morning. Most platforms default to day orders unless you actively change the setting. Good-Til-Cancelled, or GTC, keeps the instruction live across multiple sessions, but it isn't indefinite — most UK brokers automatically cancel a GTC instruction after a set period, commonly somewhere between 30 and 90 days depending on the platform, so check the exact limit on your account rather than assuming an order you placed in spring is still sitting there in autumn.
This matters more than it sounds. A stop-loss you set as a day order protects you for exactly one session and nothing more — if you place it Monday morning intending it as ongoing protection and it doesn't trigger, by Tuesday you're unprotected again unless you re-entered it or ticked GTC in the first place.
Why the summer months change the maths
Trading desks thin out through late July and August as institutional volume drops, and that has a direct, mechanical effect on every order type discussed above. Spreads widen because there are fewer market makers actively competing to quote a tight price. Market orders slip further from the last-seen price because there's simply less standing volume at each price level to absorb your trade. Stop-losses become more likely to trigger on a brief, low-volume spike that reverses within the hour — the kind of move that would barely register in October but shows up clearly when turnover has dropped. None of this means you should stop trading in summer. It means the case for a limit order over a market order, and a stop-limit over a plain stop, gets stronger exactly when fewer people are paying attention to it.
Which order type actually fits your situation
Buying a FTSE 100 blue-chip during normal market hours? A market order is genuinely fine — the spread is negligible and slippage won't move the needle on a long-term holding. Buying anything on AIM, dealing in the last twenty minutes of a session, or trading during the thin patches of August? Use a limit order, without exception. Don't rely on a standalone stop-loss to protect a volatile small-cap position overnight, particularly around results season when a gap of 10–20% at the open is entirely realistic — a stop-limit gives you more control over the exit price, at the cost of the chance it doesn't fill at all during a genuinely fast fall. And whichever order you place, check whether it's set to expire at the close of the day or to persist as GTC, because the two produce completely different outcomes from what looks like the same instruction on the ticket.
None of this requires new tools or a more expensive platform — every broker mentioned here already offers all four order types on a standard share dealing account. It requires knowing which box to tick before you place the trade, not after you've seen the price you actually got.