In the futures market, timing and precision are everything. But to succeed, it’s not enough to just “buy” or “sell.” You need to understand the different order types and how to use them to manage risk, control entries, and maximize profit potential.
In this blog, we’ll break down the most important types of orders futures traders use—and how to apply them in real-world scenarios.
Table of Contents
- Why Order Types Matter in Futures Trading
- Market Order
- Limit Order
- Stop Order (Stop-Loss)
- Stop-Limit Order
- OCO (One-Cancels-the-Other) Order
- Trailing Stop Order
- Best Practices for Order Execution
- Final Thoughts
1. Why Order Types Matter in Futures Trading
Every futures contract moves quickly—especially during high-volatility periods like economic releases or open/close sessions. The order type you choose can mean the difference between a small loss and a blown account, or a missed opportunity and a well-executed entry.
Order types help you:
- Automate decisions
- Control execution price
- Minimize slippage
- Limit losses
Let’s break them down.
2. Market Order
Definition: Executes your trade immediately at the best available market price.
When to Use It:
- When you want fast execution
- When the spread is tight and liquidity is high
Pros:
- Instant execution
- Simple and direct
Cons:
- No price control—may result in slippage
Example: You place a market buy order for MNQ. The best ask is 15,500. You’re filled instantly—but possibly a few ticks higher in fast conditions.
3. Limit Order
Definition: Specifies the maximum price you’re willing to pay (buy) or the minimum you’re willing to accept (sell).
When to Use It:
- To control entry price
- When waiting for a pullback or breakout
Pros:
- Full price control
- No slippage
Cons:
- No guarantee the order will fill
Example: ES is trading at 5100. You set a buy limit order at 5090. If price dips there, your order is filled. If not, you’re left watching.
4. Stop Order (Stop-Loss)
Definition: Becomes a market order once a set trigger price is hit. Commonly used to exit a losing trade.
When to Use It:
- To cap your downside risk
Pros:
- Automates risk management
Cons:
- May trigger during volatile wicks or noise
Example: You’re long crude oil (CL) at $75. You set a stop at $73. If price falls to $73, you exit the trade immediately.
5. Stop-Limit Order
Definition: A hybrid. Becomes a limit order once the stop price is hit—giving you control over how it fills.
When to Use It:
- When you want tighter control over exits
Pros:
- Controls slippage
Cons:
- May not fill in fast markets
Example: You set a stop at $73 with a limit at $72.80. If price drops below $73, the order activates—but will only fill at $72.80 or better.
6. OCO (One-Cancels-the-Other) Order
Definition: Combines two linked orders. When one executes, the other is automatically canceled.
When to Use It:
- To set both target and stop-loss in one bracket
Pros:
- Streamlines exit strategy
- Great for automated risk/reward setups
Cons:
- More complex to set up
Example: You buy gold (GC) at $1950. You place a take-profit at $1970 and a stop-loss at $1935. If one hits, the other is canceled.
7. Trailing Stop Order
Definition: Moves with the market in your favor, locking in gains while allowing room for price action.
When to Use It:
- To ride trends while managing risk
Pros:
- Protects profits
- Adapts to volatility
Cons:
- Can get triggered too early in whipsaws
Example: You set a 10-point trailing stop on ES. As price climbs, your stop adjusts upward. If price drops by 10 points from the high, you’re out.
8. Best Practices for Order Execution
- Use limit orders to control entries in thin markets
- Set stop-losses before you enter the trade
- Bracket trades using OCO or trailing stops
- Avoid market orders during news events
- Practice with demo accounts before using advanced orders live
9. Final Thoughts
Order types are your toolset in the futures arena. The more you master their use, the more consistent and controlled your trading becomes.
At Pilot Traders, we emphasize precision and discipline. Learn to treat every trade like a professional—starting with the right order type.
