Market Order / Market Buy / Market Sell
A market order, also known as a market buy or sell, is an order to buy or sell a security at the best available price in the current market. It is one of the most basic types of orders that can be placed on various exchanges for trading stocks and other securities.
When placing a market order, buyers will purchase a security at the ask price (or the lowest available offer) while sellers place their orders at the bid price (the highest available bid). The exchange then executes these trades based on what it perceives to be fair prices for both parties involved. This type of transaction does not guarantee any specific execution price as there are no limits set by either party when entering into this agreement.
Market orders are generally used when traders need immediate liquidity or if they believe that they can get better pricing than what is currently being offered on an exchange’s limit order book. They may also use them during times of high volatility when prices could change quickly due to large numbers of aggressive buyers and sellers in the marketplace.
Another advantage of using market orders is that traders do not have to worry about their trade sliding down an exchange’s limit book before getting filled, which could mean missing out on profits from favorable shifts in prices over time. However, since these trades are filled immediately with whatever stock/security is available in real-time, investors should be aware that they may end up buying or selling more shares than they had intended depending upon how much stock was actually traded by other investors before their own trade got executed. Therefore it’s important to know your desired entry and exit points prior to executing such transactions – especially during rapid movements within volatile markets!
