Trading & Markets

Market Order

An order to trade immediately at the best available price.

Consumes liquidity and pays the spread. Certain execution, uncertain price.

The danger in a thin book: a large market order walks up multiple price levels, and the average fill can be far worse than the quoted touch. Quoted spread describes the first unit, not the hundredth.

When it is correct. When the cost of not trading exceeds the spread - which is most of the time for someone acting on short-lived information, and rarely the case for a patient portfolio adjustment.

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