Market order is an order instruction submitted to an exchange or broker to buy or sell a financial instrument immediately at the best available bid or ask price currently posted in the order book. Market orders prioritize immediate execution and generally execute quickly when liquidity is available, but neither execution timing nor final price is absolutely guaranteed.
How it works
The order reaches the matching engine and immediately consumes resting liquidity from the top of the opposite order book.
If the order size exceeds the volume available at the top price level, it sweeps through deeper book levels at progressively worse prices.
Why it matters
Market orders prioritize prompt execution when liquidity is available, so they are commonly used when execution matters more than exact price.
In illiquid or high-volatility environments, market orders can suffer severe slippage far away from the last traded price.
A simple market example
A stock's quotes are Bid $49.95 (1,000 shares) and Ask $50.05 (200 shares). A trader submits a market buy order for 500 shares. The order fills 200 shares at $50.05, and the remaining 300 shares fill at the next ask level of $50.10, resulting in an average fill price of $50.08.
Common mistakes
Using market orders in pre-market, after-hours, or low-volume assets where bid-ask spreads are exceptionally wide.
Assuming the 'last traded price' displayed on a retail chart is the guaranteed price a market order will receive.
Frequently asked questions
Why do market orders cross the spread?
Market buy orders execute against the Ask (the lowest price sellers accept), while market sell orders execute against the Bid (the highest price buyers offer), actively paying the spread.
Can a market order fail to fill completely?
Yes, if there is zero opposite liquidity in the entire order book (e.g., during a locked limit-down circuit breaker in equity markets).
Do market orders incur higher trading commissions?
On maker-taker fee exchanges, market orders pay taker fees because they remove liquidity from the order book.
Educational content only. Definitions describe common market usage and may vary by jurisdiction, instrument, or institution.