Market Order

A market order is an order to buy or sell a stock at the current market price. Unless you specify otherwise, your broker will enter your order as a market order.

The advantage of a market order is you are almost always guaranteed your order will be executed (as long as there are willing buyers and sellers). Depending on your firm’s commission structure, a market order may also be less expensive than a limit order.

The disadvantage is the price you pay when your order is executed may not always be the price you obtained from a real-time quote service or were quoted by your broker. This may be especially true in fast-moving markets where stock prices are more volatile. When you place an order "at the market," particularly for a large number of shares, there is a greater chance you will receive different prices for parts of the order.

To understand where and how an order you place with your broker is executed, you should read Trade Execution: What Every Investor Should Know. For more information on the different types of orders you can place when you buy or sell a stock, please read "Brokerage Orders" in our Fast Answers databank.