Market Order
A market order is a trade instruction to buy or sell an asset immediately at the best available price. This type of order prioritizes speed over price control, ensuring execution as quickly as possible.
How a Market Order Works
- Buying with a market order means the order will be filled at the lowest available selling price.
- Selling with a market order means the order will be filled at the highest available buying price.
Pros & Cons of Market Orders
Advantages:
- Fast execution, especially in liquid markets
- Ensures trade completion, making it useful when entering or exiting a position quickly
Disadvantages:
- No price control, meaning execution could happen at an unexpected price
- Slippage risk, particularly in volatile or low-volume markets
When to Use a Market Order
- When trading highly liquid assets like large-cap stocks
- When execution speed is more important than getting a precise price
- When making small trades where minor price fluctuations are not a concern
Market orders are best for traders who want immediate execution and are willing to accept the current market price rather than waiting for a specific price level.
See also: Stop Order and Limit Order