Market order
TradingDefinition
An instruction to buy or sell immediately at whatever the current market price is. Market orders fill within seconds on big liquid stocks like Apple or SPY. But on small or thinly-traded stocks, the price can jump between the moment you click and the moment you are filled, sometimes by a lot.
Rule of thumb: market orders are fine for big-name stocks during normal trading hours. Avoid them on small-cap stocks, in pre-market or after-hours sessions, or around market-moving news.
Rule of thumb: market orders are fine for big-name stocks during normal trading hours. Avoid them on small-cap stocks, in pre-market or after-hours sessions, or around market-moving news.
Example
You place a market order for 1,000 shares of a small-cap stock right at 9:30 AM when the market opens. The last printed price was $12, but nobody is selling that low anymore. Your order fills at $12.80, which is 6.7% higher than the price you saw.