Glossary
Market Order
An instruction to trade immediately at whatever price is currently available, rather than at a price you name.
A market order says: do this now, at the going rate. During market hours it normally executes within moments, which is its entire appeal. What it does not do is promise a price.
The price you receive is the one available at the instant the order reaches the market, which may differ from the number that was on your screen a second earlier. That difference is called slippage. On a large company whose shares trade constantly it is typically pennies. On a thinly traded one, or in the first minutes after the market opens, it can be considerably wider.
Market orders placed while the market is closed do not sit at last night's price. They queue for the open, which is often the most volatile part of the day, and execute into it.
Learn this properly
Lesson 3: How Buying a Stock Actually WorksBrokerage accounts, what happens in the seconds after you press the button, and order types explained without the jargon.
Related terms
- Limit OrderAn instruction to trade only at a stated price or better, which may go unfilled if that price is never reached.
- Brokerage AccountThe account that holds your investments and places your orders on an exchange, opened with a licensed broker.
- VolumeHow many shares changed hands over a period, usually reported as the total traded during a single day.
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