What Is a Market Order? (Day Trading Glossary)

A market order is an instruction to your broker to buy or sell a stock right away at the best available price. It puts speed first, which means you accept whatever the current price is in exchange for getting the trade done.

It's the default order type at most brokers, and it's how a lot of people place their first trade without realizing there are other options.

How a market order works

When you send a market order, the broker fills it almost instantly, as long as there are buyers and sellers active in the stock. You pick how many shares you want, and the market decides the price.

The one thing it doesn't do is lock in a price. You take whatever the stock is trading at that second, so the fill can come in a little different from the number you saw on your screen a moment earlier. On a liquid stock that difference is usually tiny.

The upside and the risk

Speed and certainty are what a market order gives you. On a heavily traded stock or a big ETF, it gets you in or out almost immediately, and you rarely have to worry about the order sitting unfilled.

What you give up is control of the price. In a fast-moving market, the price can shift while your order fills, which is called slippage. And on a thin, rarely traded stock with a wide bid-ask spread, a market order can fill well away from where you expected, because it takes whatever prices are available. The less liquid the stock, the more a market order can cost you.

Market order vs limit order

The choice between the two comes down to what you care about more. A market order prioritizes getting filled, so you give up control of the exact price. With a limit order it works the other way around: you name the price you'll accept, and the trade only happens if the stock reaches it, so it might not happen at all.

How I use market orders

For the momentum I trade, speed can matter a lot. When a clean setup breaks and the stock is about to run, sometimes I need to get filled right now, and a market order or a tight marketable order does that.

But I'm careful about where I use one. On a thin, low-float stock with a wide spread, a market order can slip and hand me a bad fill, so I lean on a limit order to control what I pay. I use a market order when getting in matters more than a few cents, and I switch to a limit order once the spread is wide enough to hurt. That judgment is part of how I trade.

Frequently asked questions

What is the disadvantage of a market order?

You give up control of the price. Because a market order takes the best available price right now, a fast move or a wide spread can fill you worse than you expected, which is called slippage. It's most risky on thin, low-volume stocks, where the gap between buyers and sellers is large.

What happens when you place a market order?

Your broker sends it to be filled immediately at the best price available. As long as there are active buyers and sellers, it usually executes within seconds. You'll then see the actual fill price, which can be slightly different from the last price you saw, especially if the stock is moving fast.

Market order or limit order, which should I use?

It comes down to speed versus price. A market order fits when the stock is liquid and you want in or out immediately. Once a stock is thin and its spread is wide, a limit order protects you from a bad fill. Many active traders default to limit orders for that control.

This content is for educational purposes only and is not financial advice. Trading involves significant risk and may not be suitable for all traders.