Market Order
Definition
An order to buy or sell a security immediately at the best available current price. Market orders guarantee execution but not the exact price.
A market order is the simplest trade instruction: buy or sell right now at whatever the current market price is. When you tap "Buy" in most trading apps without specifying a price, you're placing a market order. It prioritizes speed and certainty of execution over price control.
For liquid securities (large-cap stocks, major ETFs, Bitcoin on major exchanges), market orders execute nearly instantly at prices very close to the displayed quote. The difference between the expected price and actual execution price is called slippage, and it's minimal for liquid markets.
However, market orders can be risky in certain situations: illiquid stocks with wide bid-ask spreads, volatile crypto tokens, after-hours trading, or during market-moving events. In these cases, the execution price may differ significantly from what you expected.
Market orders on exchanges work by matching with existing limit orders on the order book. Your buy market order fills against the lowest ask prices, sweeping up available orders until your quantity is filled. For large orders on thin order books, this can result in progressively worse prices as you fill through multiple levels.
Most financial advisors recommend limit orders for individual stock trades and market orders for broad index ETFs where the bid-ask spread is penny-wide and execution concerns are minimal. For crypto, limit orders are generally preferred due to the wider spreads and higher volatility.
Where this appears in Clarity
Clarity automatically tracks and calculates these concepts across your connected accounts.
Related Terms
Frequently Asked Questions
Can I lose money on a market order?
A market order itself doesn't cause losses, but it can execute at a worse price than expected (slippage). In extreme cases with illiquid assets, market orders can fill at prices far from the displayed quote. Use limit orders when price precision matters.
Do market orders always fill immediately?
In normal market conditions for liquid securities, yes. During market closures, the order queues until the market opens. In extremely illiquid markets, there may not be enough counterparty orders to fill your entire quantity immediately.