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Market Order

A market order refers to a direction that investors give to their broker to purchase an asset or stock at the best possible price point. It is the most common type of order investors and traders make in the market.

When placing a market order, the trader cannot purchase the asset at a specific price but rather at a price that’s based on the current market supply. By placing a market order, the trader is instructing its broker to execute the trade as soon as possible at the current market price. 

However, note that the order will get filled in immediately only if the market is open. Otherwise, if a trader places a market order while the market is closed, the order will get executed at the market open. 

In contrast to limit and stop-loss orders, a market order is the best choice for those who want to trade a security as soon as possible at the current price point.

Market orders are mainly used by investors who are trading the most popular index and mutual funds, and equities. In addition, investors who want to employ the well-known dollar-cost averaging (DAC) strategy can also take advantage of market orders because these investors buy securities at the same time intervals regardless of the price trend. 

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Author: Mircea Vasiu Updated: July 8, 2022