Market Order

Order to buy or sell immediately at the best available current price.

A market order is an instruction by an investor to a broker to buy or sell a security immediately at the best available current price. It is the simplest and most common type of order in financial markets. Because it prioritizes speed of execution over price precision, a market order is almost always filled instantly during regular market hours, provided there is sufficient liquidity in the asset. When a market order is placed, it interacts directly with the existing limit orders on the broker's order book. A market buy order will match with the lowest available asking price (the ask), while a market sell order will match with the highest available bidding price (the bid). Because prices fluctuate constantly, the final execution price may differ from the last quoted price shown before the order was submitted. Investors use market orders when their primary goal is to enter or exit a position quickly, such as when trading highly liquid, large-cap stocks where the bid-ask spread is extremely narrow. However, a major pitfall of market orders is "slippage." In volatile markets or for thinly traded assets, a large market order can sweep through multiple price levels on the order book, resulting in a much worse average execution price than expected.

An investor wants to buy 100 shares of Company XYZ immediately. The current quote shows a bid of $49.95 and an ask of $50.00. The investor submits a market buy order. The order executes instantly at the lowest available selling price, which is the ask price of $50.00, resulting in a total purchase cost of $5,000 (100 shares $50.00), excluding any broker fees.