Market Order

1. Definition

A Market Order is an instruction to buy or sell a security immediately at the best available current price. * Priority: Speed > Price. It guarantees execution but does not guarantee the price.

2. Mechanism (The Taker)

• It executes aggressively against the limit orders resting in the order book.
• Buying: You hit the "Ask" price (crossing the spread).
• Selling: You hit the "Bid" price.
• Since you are "taking" liquidity from the market, exchange fees are often higher for market orders compared to limit orders.

3. The Trade-off

• Pros (Speed): Used when getting into or out of a trade right now is more important than the specific price. Essential for emergency exits.
• Cons (Slippage): In fast-moving or illiquid markets, the price you get filled at can be significantly worse than the price you saw on the screen.

4. Analogy

• Limit Order: "I will buy this fish only if you sell it for $10." (You might go home empty-handed).
• Market Order: "Give me that fish right now, I don't care if it's $10 or $12!" (You definitely get the fish, but you might overpay).