what is a market order 
a market order is an instruction by an investor to a broker to buy or sell stock shares bonds or other assets at the best available price in the current financial market it is the default choice for buying and selling for most investors most of the time if the asset is a large cap stock or a popular exchange traded fund etf there will be plenty of willing buyers and sellers out there that means that a market order will be completed nearly instantaneously at a price very close to the latest posted price that the investor can see 1a limit order which instructs the broker to buy or sell only at a certain price is the main alternative to the market order for most individual investors understanding market ordersif you use an online broker clicking on the buy or sell button generally calls up an order form that the user is required to fill in it needs to know the stock symbol whether you re buying or selling and how many shares it also asks for a price type the default price type is generally market that makes it a market order the investor is not setting a price but is indicating a willingness to pay the current market price 2there are other options including market on close which indicates that you want the transaction at the last possible moment in the session and limit which allows you to buy only at or below a set price or sell only at or above a set price the market on close option is for people who think they ll get the best price of the day at the end of the day the limit order allows you to walk away from your laptop confident that an opportunity won t be missed if you think a stock will hit a level you find acceptable soon try a limit order if you re wrong the transaction won t take place a market order is the most common and straightforward transaction in the markets it is meant to be executed as quickly as possible at the current asking price and it is the choice of most stock buyers and sellers most of the time that s why it s the default option the market order is usually the lowest priced option as well some brokers charge more for transactions that involve limit orders the market order is a safe option for any large cap stock because they are highly liquid that is there s a huge number of their shares changing hands at any given moment during the trading day the transaction goes through immediately unless the market is wildly unsettled at that moment the price displayed when you click on buy or sell will be nearly identical to the price you get the market order is less reliable when trading less liquid investments such as small cap stocks in obscure or troubled companies because these stocks are thinly traded the bid ask spreads tend to be wide as a result market orders can get filled slowly and at disappointing prices market order vs limit ordermarket orders are the most basic buy and sell trades limit orders give greater control to the investor a limit order allows an investor to set a maximum acceptable purchase price amount or a minimum acceptable sales price while placing an order the order will be processed only if the asset hits that price limit orders are preferable in a number of circumstances limit orders are commonly used by professional traders and day traders who may be making a profit by buying and selling huge quantities of shares very quickly in order to exploit tiny changes in their prices transactions in big cap stocks like apple and microsoft tend to be fulfilled nearly instantaneously and without issue smaller and more obscure stocks might not example of a market ordersay the bid ask prices for shares of excellent industries are 18 50 and 20 respectively with 100 shares available at the ask if a trader places a market order to buy 500 shares the first 100 will execute at 20 the following 400 however will be filled at the best asking price for sellers of the next 400 shares if the stock is very thinly traded the next 400 shares might be executed at 22 or more this is why it s a good idea to use limit orders for some transactions market orders are filled at a price dictated by the market limit orders give more control to the trader as opposed to limit or stop orders which provide traders with more control a trade for a large number of shares can also be entered as a sweep to fill order that is broken into segments and executed at the best price special considerationsany time a trader seeks to execute a market order the trader is willing to buy at the asking price or sell at the bid price thus the person conducting a market order is immediately giving up the bid ask spread for this reason it s a good idea to look closely at the bid ask spread before placing a market order especially for thinly traded securities failure to do so can be costly this is doubly important for people who trade frequently or use anyone utilizing an automated trading system market order faqshere are the answers to some commonly asked questions about market orders a market order directs a broker to buy or sell shares of an asset at the prevailing market price it is the most common way to buy or sell stocks for most investors most of the time a market order by definition is an instruction for immediate purchase or sale at the current price it s a bit like buying a product without negotiating however in the financial markets a fair price at any given moment is determined by the vast volume of sell and buy orders being resolved you ll get the price that is fair at that moment traders have the option of making it a limit order rather than a market order a limit order sets a specific maximum price at which the investor is willing to buy or a specific minimum price at which the investor will sell the limit order will sit there until it is fulfilled or it expires in an online buy or sell order the good for day option will cancel the order at the market close if the price is not met a batch order is a behind the scenes transaction conducted by brokerages at the start of the trading day they combine various orders for the same stocks and push them through as if they were a single transaction batch trading is permitted only at the opening of the market and only with orders placed between trading sessions each batch order will consist of a number of market orders sent through sometime between that day s session and the previous close 