Market order

When you place a market order, your broker sends it to be filled straight away against the best available prices: the lowest ask if you are buying, the highest bid if you are selling. For a small order in a heavily traded share during normal hours, the price you get will usually be very close to the price on your screen. A large order, however, may use up all the shares offered at the best price and then be filled at progressively worse prices further down the order book, sometimes called walking the book.

The advantage of a market order is near-certainty that the trade will happen. The drawback is that you do not know the exact price in advance. The risk of a poor fill is greatest in illiquid shares, when markets are moving fast, and at the start of trading, when prices can jump from the previous close. An order placed while the market is shut may be executed at the opening price, which can differ considerably from the last price you saw. Where price matters more than speed, a limit order sets a maximum purchase price or minimum sale price.