What Is a Market Order In Trading?

If you're using a new investing app, you may encounter some jargon you haven't heard before (the stock market is teeming with words we don't use in casual conversation). One of those terms is market order.

What does market order mean, and when should you use it?

What a market order is in investing, explained

A market order is one of three main order types in investing (market, limit, and stop loss order).

When you submit a market order, you're executing a buy or sell trade at the best available price of the current market value.

When does a market order get executed?

Unlike a limit or stop loss order that sets boundaries on a stock's price, a market order pretty much guarantees that your order executes fully.

Since there are no limitations on maximum or minimum buy or sell price, your trade typically executes immediately (as long as you're trading within the US stock market hours of 9:30 am – 4 pm Eastern Time). If you submit a market order outside of these hours, it will execute the next market day.

The best time to use a market order

It's best to use a market order when you think the stock is currently priced well. A stock's price changes minute to minute, so you may not get the exact value of when you press the "buy" or "sell" button.

Be careful when using a market order while a stock is extremely volatile at the time of purchase or sale. Make sure you're not paying wildly more than you initially planned, or selling for much less than you hoped. Stocks with small market caps and meme stocks are a couple of examples of securities that might be more volatile from moment to moment.

Avoid executing a market order outside of market hours. Institutional and preferred investors often trade after market or pre-market. Plus, earnings reports, press releases, and economic news often gets released outside of market hours. Because of this, the following day's opening stock value could be much higher or lower than the previous close, meaning you could suffer capital losses with your sale or have a high cost basis with a buy.

Raseed is a trading app that offers residents in GCC countries the opportunity to invest in the US market, and it does so using market orders. This streamlines your investing and provides you the opportunity to capitalize on current stock market happenings on the fly. Plus, we only offer trading during US market hours, so you don't have to worry about figuring out time zones to make your trade.