What Is a Market Order?
A market order instructs your broker to buy or sell a security immediately at the best available price. Execution is nearly guaranteed, but the fill price is not — in fast-moving or thinly traded markets, the actual price can differ from the quoted price.
How a Market Order Works
When you submit a market order, your broker routes it to the exchange or market maker and requests an immediate fill at whatever price is currently available. For highly liquid securities like large-cap stocks or major ETFs during regular trading hours, the fill typically happens within milliseconds and the price you receive is very close to the last quoted price. Execution speed is the defining characteristic: market orders prioritize getting the trade done over getting a specific price.
The gap between the price you see on screen and the price you actually pay or receive is called slippage. Slippage is minimal for liquid securities in calm conditions but can be significant for small-cap stocks, thinly traded names, or during high-volatility events like earnings releases or market open. If you place a large market buy order relative to a stock's typical daily volume, your order can move the market against you as it consumes available sell orders at progressively higher prices — this is called market impact.
A common misconception is that the price displayed on a brokerage screen is the price you will pay with a market order. That displayed price reflects the most recent trade or the current bid/ask — by the time your order arrives at the exchange, the price may have moved. During after-hours trading, spreads widen considerably and market orders carry substantially more slippage risk, which is why many experienced traders avoid market orders outside regular trading hours.
Key Points
- A market order guarantees execution but does not guarantee price — you accept whatever the market offers at that moment.
- Slippage risk is highest in thinly traded securities, volatile conditions, and outside regular market hours.
- Market orders are best suited to highly liquid stocks or ETFs when getting into or out of a position quickly is the priority.
- For large orders or illiquid names, consider a limit order to avoid paying an unfavorable price due to market impact.
Learn More
Market orders are just one of several order types available to traders — each with distinct tradeoffs between price certainty and execution certainty. See Stock Order Types Explained for a full walkthrough of market, limit, stop, stop-limit, and trailing stop orders.
Related: What Is a Limit Order? · Trading Glossary
Related Questions
What is a limit order? A limit order lets you specify the maximum price you're willing to pay (for a buy) or the minimum price you're willing to accept (for a sell). Unlike a market order, a limit order won't fill at a worse price than you specify — but it may not fill at all if the market never reaches your limit price.
When should I use a market order vs. a limit order? Use a market order when speed of execution matters more than price — for example, when buying a highly liquid large-cap stock and you want to enter immediately. Use a limit order when price precision matters more than guaranteed execution, such as when trading a smaller or more volatile security where slippage could be meaningful.