Market Order

A Market Order is an instruction to buy or sell a security at the best available price in the current market. It prioritizes speed of execution over price certainty.

How Market Orders Work:

1. You submit a market order to buy 100 shares
2. Your broker sends it to the exchange
3. It executes immediately at the best available ask price
4. You receive confirmation of the executed price

Advantages:

• Guaranteed Execution: Almost always fills (if market is open)
• Speed: Executes immediately
• Simplicity: No price decisions needed
• Best for Liquid Stocks: Minimal price impact

Disadvantages:

• No Price Control: May execute at unexpected price
• Slippage Risk: Especially in volatile or illiquid stocks
• Gap Risk: Can fill at significantly different prices during market opens

When to Use Market Orders:

Situation	Use Market Order?
Large, liquid stocks	✅ Yes
Time-sensitive trades	✅ Yes
Small position sizes	✅ Yes
Volatile markets	❌ Use limit order
Illiquid stocks	❌ Use limit order
After hours	❌ Use limit order

Market Order vs Limit Order:

• Market Order: "Buy now at whatever price"
• Limit Order: "Buy only at my specified price or better"

Example: Stock trading at Bid: $50.00 / Ask: $50.05

• Market buy order executes at ~$50.05
• Market sell order executes at ~$50.00