What is a Market Order?
Understand how to buy or sell stocks instantly at the current market price.
Quick Answer
A market order is an instruction to buy or sell a stock immediately at the best available price. It guarantees execution (your order will fill) but doesn't guarantee the exact price you'll pay. Market orders are the fastest way to enter or exit a position—trades execute in seconds.
How Market Orders Work
Example: Buying Apple Stock
You check Apple's price: $180.50
This is the current asking price (what sellers want)
You place a market order to buy 10 shares
"Buy 10 AAPL shares at market price"
Order executes instantly
Your broker matches you with the best available seller
You get filled at $180.52 (10 shares)
Notice: You paid $0.02 more per share than the quoted price. This is normal—prices change every second!
Market Order Characteristics
✓ Pros
- ✓Fast execution: Fills in seconds, sometimes milliseconds
- ✓Guaranteed fill: Order will execute (for liquid stocks)
- ✓Simple: No need to set specific prices
- ✓Best for urgency: When you need in/out immediately
- ✓Works during market hours: 9:30am-4pm ET
✗ Cons
- ✗No price control: You get whatever the current price is
- ✗Slippage risk: May pay more (or receive less) than expected
- ✗Vulnerable to volatility: Bad in fast-moving markets
- ✗Dangerous for illiquid stocks: Can get terrible prices
- ✗After-hours issues: Wide spreads = bad fills
When to Use Market Orders
✓ Good Situations for Market Orders
1. Buying/Selling Liquid Stocks
Apple, Microsoft, Amazon—bid-ask spreads are tiny (1-2 cents). Market orders work great.
2. Exiting a Position Quickly
Stock is crashing and you need out NOW. Market order guarantees you'll sell.
3. Small Positions
Buying 5-10 shares? A few cents difference doesn't matter much.
4. Breaking News
Company announces great earnings—you want to jump in before price runs up.
5. During Normal Market Hours
9:30am-4pm ET when volume is high and spreads are tight.
✗ Bad Situations for Market Orders
1. Low Volume / Illiquid Stocks
Penny stocks, small-caps with wide spreads. You'll overpay by 5-10%+
2. After-Hours Trading
Before 9:30am or after 4pm—spreads widen dramatically. Use limit orders instead.
3. Market Open (9:30-9:35am)
Extreme volatility in first 5 minutes. Wait until 9:35-9:45am for calmer prices.
4. Large Orders
Buying 1,000+ shares? Your order might move the market. Use limit orders.
5. Highly Volatile Stocks
Stock moving 5%+ per minute. You might buy at $100 and it fills at $105.
Market Order Examples
✓ Good Market Order Example
Scenario: You want to buy Microsoft stock at 10:30am
Stock: MSFT trading at $380.25 with bid $380.24 / ask $380.26
Spread: $0.02 (very tight)
Volume: 5 million shares traded today (very liquid)
✓ Result: Market order fills at $380.26. You overpaid by $0.01. No big deal!
✗ Bad Market Order Example
Scenario: You want to buy a small-cap penny stock at 4:30pm (after hours)
Stock: XYZ Corp showing last price $5.00
Actual bid/ask: $4.50 bid / $5.50 ask (wide spread!)
Volume: Only 5,000 shares traded today (illiquid)
✗ Result: Market order fills at $5.50—you overpaid by 10%! Should have used limit order.
Market Order vs Limit Order
| Feature | Market Order | Limit Order |
|---|---|---|
| Execution Speed | Instant (seconds) | May take time or never fill |
| Price Control | No control | You set exact price |
| Guarantee | Guaranteed fill | May not fill at all |
| Best For | Urgency, liquid stocks | Price control, patient traders |
| Risk | Slippage | Missing the trade |
How to Place a Market Order
Open Your Brokerage App
Robinhood, Fidelity, Schwab, TD Ameritrade, etc.
Search for the Stock Ticker
Example: "AAPL" for Apple
Click "Buy" (or "Sell")
Choose your action
Select "Market Order"
Usually the default option
Enter Number of Shares
Example: "10 shares"
Review and Confirm
Check estimated cost (but remember, price can change!)
Submit Order
Order executes immediately. You'll get a confirmation with actual fill price.
Common Questions
Can I place a market order after hours?
Most brokers don't allow market orders outside regular hours (9:30am-4pm ET). You'll need to use a limit order for pre-market (4am-9:30am) or after-hours (4pm-8pm) trading.
What is slippage?
Slippage is the difference between the expected price and the actual execution price. If you see $100 but your order fills at $100.50, that's $0.50 slippage. Common with market orders.
Will my market order always fill?
For liquid stocks (high volume), yes—virtually guaranteed. For illiquid penny stocks, there might not be enough sellers, and your order could be partially filled or delayed.
Why did I get a worse price than I saw?
Stock prices change every millisecond. The price you see is from the last trade (which might be seconds ago). Your market order fills at the current ask price (for buys) or bid price (for sells), which might have moved.
Key Takeaways
- ✓Market orders execute immediately at the current best available price
- ✓Guaranteed execution but no price control—you get whatever the market offers
- ✓Best for liquid stocks during regular market hours (9:30am-4pm)
- ✓Avoid market orders for illiquid stocks, after-hours, or market open volatility
- ✓Slippage (price difference) is normal—usually just pennies for liquid stocks