Market Order  

Market orders are an instruction to buy or sell at the best available price.

A market order is an instruction to buy or sell at the best available price. Traders use market orders when they want to open or close a position immediately without waiting for any criteria to be met.

When a broker receives a market order, their priority is to fill the order as soon as possible and ensure the entire order is filled rather than partially filled. Market orders are the simplest and most common order type used and are available in every trading platform. However, market orders aren’t suitable for every trading strategy.

A common misconception of market orders is traders assuming they are filled at the price they see in the trading platform. The market price shown in trading platforms is known as the top of the book price. This price is the highest bid price and lowest ask price, but an order book is constructed of many buyers and sellers with different orders. If a market order is large enough, it might be matched against several buyers or sellers, resulting in a different average price, known as the volume-weighted average price or VWAP.

Even if you place a small market order, prices move rapidly in a dynamic market, and by the time your order reaches trading servers, the price could have moved already. If you’re trading an instrument with low liquidity or extreme volatility, then a market order could be detrimental to your trading strategy, and a limit order would be more appropriate.