What are Market Orders?
There are at least two orders to make a complete trade. A buy order when one person places an order to buy a security and a sell order while another places an order to sell that same security. Order types are the same for trading stocks, currencies, or futures etc.
Very order has to be specified whether it is a buy order or sell order regardless of the type of order being placed.
There are different types of orders that traders can use in various combinations to make trades. Every type of order can be used to buy and sell securities. Both buy orders and sell orders can be used either to enter or exit a trade. If a trade is entered with a buy order, then it will be exited with a sell order. If a trade is entered with a sell order, the position will be exited with a buy order.
Market Orders (MKT)
At Market orders, traders buy or sell at the current market price. In a vibrant market, market orders will execute immediately, but not necessarily at the exact price that the trader intended to execute.
For example, a trader may wish to place a market order to buy a stock when the best price is 150 Rs, but the order is for a popular stock that sees millions of shares exchange hands every day. In the seconds between the time an order is placed and the time it executes, the price has increased to RS 150.50. The trader who placed a market order now will have to pay more for the stock as the current market price of the security increased. Slippage is the term which is used to indicate the situation when the price of the stock moves in a reverse direction after placing a market order.
When the trader wants your order to be processed as quickly as possible, and he is willing to risk getting a slightly different price, Market orders are used. If you are buying, your market order will get filled at the asking price, as that is the price someone else is currently willing to sell for. If you are selling, your market order will get registered at the bid price, as that is the price someone else is currently ready to buy at.
