Lesson 3
Read the quote, then choose the order
Distinguish bid, ask, last price and the instructions behind an order.
Study time: about 8m
Lesson
The bid is a quoted buying price and the ask a quoted selling price. Their difference is the spread. A marketable buy generally meets the ask; a marketable sell generally meets the bid, subject to available size and changing quotes. The last traded price on a chart is not necessarily the price available for your order.
A market order prioritizes execution over a specific price. A limit order sets a price boundary and may remain unfilled. A stop-market order becomes a market order when its trigger conditions are met. A stop-limit order adds a limit and can remain unfilled after triggering. Check the provider’s trigger and order-duration rules.
An order acknowledgement is not a fill. In a demo account, locate the order status, filled quantity, average fill price and open position. Partial fills can leave both a position and an outstanding order. Know how to cancel the outstanding quantity without assuming that cancellation closes what already filled.
Worked example
A hypothetical quote shows bid 100.00 and ask 100.20. Buying one unit at the ask and immediately selling at an unchanged bid loses 0.20 price units before commission. A buy limit at 100.00 would avoid paying 100.20 but might never fill.
Try it in replay
In a simulator, place a limit order away from the current quote, inspect its status, then cancel it. Explain how you would verify there is neither a filled position nor a working order.
Check your reasoning
Check both the order list and positions. “Submitted” is not “filled,” and a cancelled remainder does not erase an earlier partial fill. Record the actual fill rather than the chart price.