market order
An order to trade right now at the best price available, so the fill is certain but the price is not.
A market order is an instruction to trade now at the best price currently available. It prioritizes getting filled over controlling the exact price.
When a buy market order reaches the market, it meets the lowest available sell offer; a sell meets the highest available buy offer. If there are not enough units at that price, the rest may fill at worse prices.
The final price can differ from the quote you saw because prices and available orders change. A market order also does not guarantee a profit or a particular exit price.
Example
In Pebble's practice market, Northwind Foods has a best sell offer of $20 for 5 shares, then $21 for 10. Nora sends a market order to buy 8 shares.
Working: 5 × $20 = $100; the remaining 3 × $21 = $63. Total = $163 for 8 shares, or $20.375 per share before fees. The order filled, but not all at the first quoted price.
Common mistakes
- Assuming the displayed quote is the guaranteed fill price.
- Ignoring the quantity available at each price and the possibility of slippage.
- Using an immediate order when price control matters more than speed.
- Most people who trade lose money.
Learn it in the course
- Order types: market, limit, stop · Choose how you enter and leave: right now at any price, only at your price, or when a level breaks. See what each order does in a fast drop, with real fill prices.
- Bid, ask, spread and liquidity · Read the two prices on every screen, see why thin markets and odd hours cost more, and what a big market order does to a thin order book.
- Case: place the right order · Three situations on a practice account: pick the order type, the price and the size, and say why, using the quotes, the spread and what a gap can do to a stop.