What is a market order?

A market order is fundamentally an instruction to buy or sell a security immediately at the best available price in the current market. The primary characteristic of a market order is its focus on execution rather than the price at which the transaction occurs. When investors place a market order, they are expressing a desire to enter or exit a position quickly, accepting whatever the current market price is at that moment.

For example, if an investor sees a stock they want to purchase and believes its price may rise quickly, they can place a market order to ensure they secure the shares without delay, regardless of slight price fluctuations at that time. Market orders are typically utilized when the priority is to complete the trade as soon as possible, rather than waiting for a specific price point.

In contrast, other types of orders such as limit orders focus on obtaining a specific price rather than an immediate execution, while conditional orders might only execute when predetermined criteria are met. This distinction underscores the immediacy associated with market orders and clarifies their operational purpose within trading strategies.