A market order in trading is a type of order that an investor makes through a broker or brokerage service to buy or sell a security at the best available price in the current market. It is a request to buy or sell a security immediately at the prevailing market price.
Market orders are the most straightforward type of order. They don’t guarantee a specific price, but they do guarantee the order’s execution. If you place a market order during the market hours, it will typically be executed instantly at the current market price.
There are some risks associated with this type of order, namely that the final executed price may be different from the seen price when the order was placed. This happens due to price fluctuations, particularly in volatile markets where prices can change rapidly. This is known as slippage. The final executed price could be higher (for buy orders) or lower (for sell orders) than expected.
Nevertheless, market orders are widely used for their simplicity and high likelihood of execution, which makes them suitable for traders and investors who prioritize executing their trades over getting a certain price.
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