Market Order

A market order is the simplest type of trade. You tell your broker how many shares you want to buy or sell, and the order is filled right away at the best available price. The advantage is speed and near certainty of execution. The drawback is that you do not control the exact price.

For large, heavily traded stocks during regular hours, a market order usually fills very close to the quoted price. But in fast-moving markets, for thinly traded stocks, or outside regular hours, the price you get can differ noticeably from the last quote you saw. This difference is called slippage.

A buy market order is generally filled at the ask price, and a sell market order at the bid price. If your order is larger than the number of shares available at the best price, part of it may be filled at less favorable prices.

Example: a stock is quoted at $100.00 bid and $100.03 ask. A market order to buy 50 shares will likely be filled at about $100.03. If the stock jumps on news in the meantime, you may pay more.