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A market order is an order to buy or sell a stock at the current market price. A broker enters an order as a market order when requested to do so by his or her client. When a market order is placed, it is almost guaranteed that the order will be executed. Ultimately, however, this depends on whether or not there is a willing buyer or seller.
A market order is usually less expensive than a limit order. A limit order is an order to buy a security at a price no greater than what has been specified by the owner. This gives the customer control over the price of the trade. A buy limit order can only be executed by the broker. It also has to meet or fall short of the limit price.
One disadvantage of a market order is that the price is paid when the order is executed. The price may not always be the same as that presented by a real-time quote service. This often happens when the market is changing very quickly. Placing an order "at the market," especially when it involves a large number of shares, offers a greater chance of getting different prices for different parts of the whole order.
There are a number of different markets in which orders can be placed, such as the stock market, bond market, and commodities market. A market order is an instruction from a customer to a broker. There are always hundreds of brokers “on the floor” of the stock exchange looking to buy and sell. Therefore, a broker must be able to process market orders quickly and efficiently.
The instructions for a market order can be simple or complicated. The broker must execute it immediately. With willing sellers and buyers, therefore, a market order can sometimes be filled in a matter of minutes.
A market order is the easiest type of order for a broker to complete. It is important to note that once a market order is placed, however, the customer has no control over the price of the transaction. The broker is tasked with finding the best price available at that moment.
A market order can be placed from anywhere in the world. The broker, however, is the only person who needs to be on the floor in order to complete the transaction. Therefore, an investor who wishes to invest, buy, or sell shares must call his or her broker and allow the broker to care of the rest.