What is Market Order?
A market order is an instruction to buy or sell a security immediately at the best available current market price.
A market order prioritizes speed of execution over price control. When you place a market order, you are agreeing to buy at the current lowest 'ask' price or sell at the current highest 'bid' price available in the market. It is the most straightforward way to enter or exit a position.
While execution is nearly guaranteed, the final price is not. In fast-moving or illiquid markets, the price you get (the execution price) can differ from the last quoted price, a phenomenon known as 'slippage.' This is especially relevant for large orders or highly volatile stocks.
ExampleIf you want to immediately buy shares of an S&P 500 ETF like SPY, you would use a market order. Your broker will execute the trade at the best available selling price at that exact moment, ensuring you get the shares right away.