Trading 101 & Order Types: Market Orders

TradingBull
2 min readNov 29, 2020

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Interface of a financial Terminal

A market order is an order to buy or sell an asset which is executed at the current market price.

A market order will match every orders at the opposite side of the order book until the total amount for the order has been fulfilled entirely.

Pros: Certainty of fast and full execution.

Cons: Price not warranted (floating execution price).

Example:

Currently, the order book for the pair ABC/USD on the exchange is as follow:

Order book of pair ABC/USD (bid:green vs ask:red)

You want to buy (bid) 10ABC at market price. Once your order is placed, it will automatically (and nearly instantly) match (and execute) against the ask-offers of the opposite side (red side).

Consequently, you will instantly buy and obtain from the book:

0.0063 ABC at $9,472.9

6.841 ABC at $9,473.0

3.1527 ABC at $9,473.2

Total: 10 ABC

In average, you have paid $9,473.1 per ABC.

Placing a market order automatically results into paying the taker fees (taker, as matched/executed immediately).

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