Order Types Explained
TL;DR. A market order fills immediately at whatever price is available — fast but expensive. A limit order sits in the book and fills at your price or better — slower but cheaper. For scalpers, this distinction is not academic: at 30 trades per day, choosing limit over market orders consistently can save several percent per month in fees alone.
The two fundamental orders
Every other order type is a variation of just two:
Market order — you say "buy now, whatever the price." The exchange matches you against the best available resting orders immediately. You are guaranteed a fill; you are not guaranteed a price. In a fast-moving, thin market, you might pay significantly more than you expected. This is called slippage.
Limit order — you say "buy at $84,000, no higher." Your order rests in the book until another participant decides to sell at that price. You control your entry price; you do not control whether or when you fill. If price never comes back to $84,000, your order sits unfilled.
Maker vs taker — why it matters for scalpers
Most exchanges split fees based on which side of a trade you are on:
- Taker — you remove liquidity by hitting a resting order (market orders are always taker; aggressive limit orders that cross the spread are also taker).
- Maker — you add liquidity by placing a limit order that rests in the book and waits.
A typical fee structure on a major perpetuals exchange:
| Fee type | Typical rate | Example: $10,000 position |
|---|---|---|
| Taker | 0.05% | $5.00 per trade |
| Maker | 0.02% | $2.00 per trade |
That $3 difference per trade sounds small. Across 30 round-trips per day: $90/day difference — over $2,000 per month on a $10,000 account. This is why professional scalpers are obsessive about using limit orders for entries wherever their strategy permits.
Some exchanges (notably Bybit and Hyperliquid) offer negative maker fees (rebates) — meaning you actually get paid for adding liquidity. A −0.01% maker fee means placing a resting limit order earns you money when it fills, even before any profit on the trade.
Stop orders
A stop order triggers a market or limit order once price reaches a specified level. Two main uses:
Stop-loss — protects against an open position moving against you. Example: you are long at $84,000 and place a stop-loss at $83,800. If price falls to $83,800, your position is automatically closed, limiting your loss to $200 per BTC.
Stop-entry — triggers a buy (or sell) when price breaks through a level. Example: you want to buy a breakout above $85,000 resistance without sitting at the screen — you place a stop-entry buy at $85,050.
Market stop vs limit stop
A stop-market order triggers a market order when the stop level is hit — guaranteed to close, but subject to slippage in fast markets. In a liquidation cascade, a stop-market on a large position can fill substantially worse than the trigger price.
A stop-limit order triggers a limit order when the stop level is hit. This gives you price control but carries the risk of non-fill — if price gaps straight through your limit, the order sits unfilled while your loss grows. For stop-losses, most scalpers prefer stop-market to guarantee the exit.
Reduce-only orders
Most futures exchanges offer a reduce-only flag on orders. This prevents your stop or exit order from accidentally opening or adding to a position if your main order closes first. Always use reduce-only on stop-losses and take-profits when trading futures. Failing to do so can create unwanted new positions if orders execute out of sequence.
Post-only orders
A post-only order is a limit order that will only execute as a maker (never a taker). If your limit order would immediately cross the spread and fill as a taker, the exchange cancels it instead. This guarantees you always pay maker fees — useful when fee minimisation is a priority, but you need to allow for the possibility that the order is cancelled rather than filled.
Practical use for scalpers
Entries: use limit orders wherever the setup allows — rest your order at or just inside the level you want, and let price come to you. This saves taker fees and often gets a better entry price.
Exits (take-profit): limit order at your target. Price often bounces at obvious levels, and a resting limit gets filled at the exact level rather than the next tick below.
Exits (stop-loss): stop-market order to guarantee the exit. Slippage on a stop-loss is almost always less damaging than a non-fill on a stop-limit in a fast market.
Breakout entries: stop-entry orders work well for breakout setups where you want to buy confirmation rather than anticipation — but size down, because stop-entries fill at or worse than your trigger.
Common mistakes
Using market orders for every entry. Many beginners default to market orders because they feel "safer" — the fill is certain. But certainty of fill at an uncertain price is expensive over time.
Placing stop-losses at round numbers. $84,000, $85,000 — everyone puts their stops there. Price often sweeps these levels precisely because of the cluster of stop orders, then reverses. Place stops a few ticks beyond the obvious level, or use a volatility-based approach (see ATR).
Forgetting reduce-only on futures stops. This can create an unintended new position when you meant to exit — a painful and avoidable mistake.
Overly tight limit entries. If your limit order is a single tick inside the spread, it might not fill before price moves away. In fast markets, a slightly more aggressive limit (a few ticks inside the current price) fills more reliably while still saving most of the taker fee.
Further reading
- Risk and sizing — how position size interacts with stop-loss placement.
- Order book and DOM — where your limit orders sit and how they interact with the market.
- Execution basics — latency, slippage, and getting fills at the price you intended.
This article is educational content, not investment advice. Trading derivatives carries substantial risk, including total loss of capital. See disclaimer.