Market Order
An order to buy or sell a security immediately at the best available current price, prioritizing execution speed over price certainty.
What is Market Order?
A market order is an instruction to buy or sell a security immediately at the prevailing market price, with execution certainty but no price guarantee. Market orders are the simplest and fastest order type, typically filling within milliseconds during regular trading hours for liquid stocks. The risk is slippage — the difference between the expected price and the actual execution price — which can be significant for large orders in thinly traded securities or during periods of high volatility. For highly liquid large-cap stocks such as Apple or Microsoft, slippage on a small market order is typically negligible. For penny stocks or illiquid small-caps, a market order can execute at a price far from the quoted price.
Example
An investor places a market order to buy 100 shares of Microsoft while it is quoted at $420.00 bid and $420.05 ask. The order executes immediately at $420.05 — the ask price. Had she instead used a market order during a thin after-hours session, she might have paid $422.00 due to wider spreads and lower liquidity, highlighting why market orders require more caution outside regular trading hours.
Source: Investopedia — Market Order