Market Order

Investment Dictionary -> Market Order

What is a market order?

A market order refers to an order for buying or selling a stock immediately at the available best current price. “Unrestricted order” is often used synonymously with the term market order. A broker is entrusted with the responsibility of carrying out the market order by his or her client.

What are the advantages of a market order?

• A market order almost provides a guarantee with regard to its execution.
• A market order often accompanies minimal commissions. This is because of the fact that brokers are required do less amount of work.
• A market order is generally less expensive compared to a limit order. A limit order refers to buying a security at a price which should be no more than what has been stated by the owner.

• Another advantage of the market order is that it can be placed by an investor sitting in any part of the world. The broker is the only person needed to completely take care of the entire transaction. In fact, this is the easiest and the most convenient type of order to carry out for a broker. The transaction can be completed within a couple of minutes.

There are several markets in which market orders are placed. These are stock market, commodities market or bond market. You should be cautious of using the market orders in low average everyday volume or quantity of stocks. This is because in this type of order, price is paid at the time of execution of order. In a volatile market, the price may not be remaining the same as that which is presented by a “real-time quote service”. Thus there is always the possibility of ending up with paying much more than you earlier had anticipated. The safest is to use the market order on stocks of high volume.

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