A market order tells your broker or exchange to fill your trade right now, at whatever price the market offers. It prioritizes speed and certainty of execution over price. A market buy fills at the best available ask (offer); a market sell fills at the best available bid.
How it works
The order book holds resting limit orders from other traders. A market order “takes” that liquidity, starting with the best price and moving to the next price level if the first one does not hold enough size. That leads to two costs:
- The spread: buying at the ask and selling at the bid means you start every round trip slightly behind.
- Slippage: if your order is larger than the size available at the best price, or if price moves between your click and the fill, you get a worse average price.
Both costs rise in fast, volatile or thinly traded markets. On exchanges, market orders usually pay the higher “taker” fee. Many stop-loss orders become market orders when triggered, which is why stops can fill below their set level.
Example
A coin shows a best bid of 24.98 and a best ask of 25.02, with 300 coins offered at 25.02 and 500 at 25.05. A trader sends a market buy for 600 coins.
- 300 fill at 25.02 = 7,506
- 300 fill at 25.05 = 7,515
- Total cost 15,021, average price 25.035
The trader saw 25.02 on screen but paid an average of 25.035, 0.015 of slippage per coin (about $9 in total), on top of the 0.04 spread. Selling back immediately at the 24.98 bid would lose about 0.055 per coin before fees.
Common mistakes
- Large market orders in thin books. Size larger than displayed liquidity walks through several price levels.
- Market orders during news. Spreads can widen sharply in seconds.
- Ignoring fees. Taker fees add up for active traders.
- Using market orders out of habit. If speed is not essential, a limit order controls price.
Educational content — not financial advice.
Updated