Market Order
Definition
A market order is an instruction to buy or sell immediately at the best available price. It prioritises speed of execution over price certainty. While market orders are simple to use, they expose traders to slippage in fast or illiquid markets, making broker execution quality a key consideration.
In Plain English
In plain terms, a market order tells the broker: ‘Execute this trade now.’ You are not specifying an exact price. Instead, you accept whatever price is available when the order reaches the market. This ensures the trade is filled quickly, but the final price may differ from what you see on screen.
How It Works
- You place a market order to buy or sell an instrument.
- The broker sends the order for immediate execution.
- The order is filled at the best available price at that moment.
- If liquidity is deep and the market is stable, the fill price may closely match the quoted price.
- If prices move quickly or liquidity is thin, the fill price may be worse than expected.
- The executed price is confirmed in the trade history.
- Market orders cannot be partially controlled for price once submitted.
- Execution outcome depends on liquidity, volatility, and the broker’s execution model.
Why This Matters for Traders
Market orders are commonly used for entering or exiting positions quickly, particularly when execution certainty is more important than price precision. However, the simplicity of market orders can mask execution risk. For leveraged trades, even small differences in execution price can materially affect risk and cost, especially during volatile conditions.
Common Misunderstandings
- Market orders always fill at the quoted price: the quoted price can change before execution.
- Market orders are risk-free compared to other orders: they carry price risk through slippage.
- Only beginners use market orders: professionals use them when speed is critical.
- Market orders avoid broker discretion: execution still depends on broker routing and rules.
- Market orders guarantee full size fills: partial fills can occur in thin markets.
How This Affects Broker Choice
Because market orders rely entirely on execution quality, broker choice has a direct impact on outcomes. When comparing brokers, users should consider:
• Average slippage on market orders.
• Execution speed and reliability during volatile periods.
• Transparency in showing requested vs executed prices.
• Liquidity access and order-routing practices.
• Whether positive slippage is passed on to clients.
From a comparison and monetisation perspective, market-order behaviour often reveals real-world broker performance beyond advertised spreads. This supports linking to broker reviews and execution-focused comparisons.
Risks & Common Mistakes
• Using market orders during major news releases without accounting for slippage.
• Trading illiquid instruments where price gaps are common.
• Assuming tight spreads guarantee good market-order fills.
• Placing large market orders without considering available liquidity.
• Choosing brokers with opaque execution policies.
Risk note: market orders expose traders to execution price risk, which can increase losses during fast or illiquid markets, particularly when leverage is used.
Real-World Example
You place a market order to buy a CFD when the quoted price is £100.
• During a quiet market, the order executes at £100.10.
• During a volatile market, the same order executes at £102.
The difference reflects market conditions and execution, not an error. On a leveraged position, this price difference can materially affect risk and outcome.
What to Check Before Trading
- How does the broker disclose slippage on market orders?
- Are execution prices clearly shown in trade confirmations?
- How does execution quality change during volatile periods?
- Does the broker provide data on order-routing and liquidity access?
- Are market orders suitable for the instruments you trade?
- Can execution behaviour be tested on a demo or small account?
- Is the broker regulated under execution standards that require fair treatment?
Related Concepts
Limit orders prioritise price certainty over execution certainty, unlike market orders.
Slippage explains why market orders may execute at worse prices than expected.
Execution quality determines how market orders are filled in practice.
Liquidity availability affects how much price impact a market order creates.
Spread is the quoted cost, while market-order execution determines the final price paid.
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Risk Warning: This website does not provide financial, investment, or trading advice. All information is for educational purposes only. Trading and investing involve substantial risk of loss. You should carefully consider your financial situation and consult with qualified professionals before making any financial decisions.