Market Order

Market Orders

Market orders are an essential tool in the stock trading world, allowing investors to quickly buy or sell securities at the prevailing market price. While market orders prioritise execution speed, they do not guarantee a specific execution price. Understanding the dynamics of market orders is crucial for traders, enabling them to navigate the fast-paced environment of financial markets. By grasping the concepts investors can effectively utilise market orders in their trading strategies, facilitating informed decision-making and optimising their investment journey. 

What is a market order?  

A market order is a fundamental concept in stock trading that enables investors to swiftly buy or sell a specified number of shares at the prevailing market price. Unlike limit orders, which allow traders to set a specific price at which they are willing to trade, market orders prioritise prompt execution over price. The primary objective of a market order is to ensure immediate completion of the trade, irrespective of the exact price at which the transaction occurs. By executing at the best available price on the market, market orders enable investors to capitalise on rapid price movements or swiftly manage their risk. However, it is important to note that market orders do not guarantee a specific execution price, as they prioritise speed over price certainty. 

Understanding market orders  

Market orders are favoured when speed and execution certainty are crucial, as they enable traders to swiftly enter or exit positions. These orders are executed at the best available price on the market at the time of placement. Market orders are commonly used when traders seek to buy or sell stocks quickly, especially in highly liquid markets. They are suitable for situations where the exact purchase or sale price is not a primary concern, such as when a trader wants to capitalise on short-term price movements or is looking to quickly exit a position to manage risk. Additionally, market orders are frequently utilised in fast-paced trading environments, including day trading or high-frequency trading, where timely execution is critical. 

Use of a market order  

The use of a market order is prevalent in financial markets, serving as a valuable tool for traders looking to execute trades swiftly and efficiently. Market orders are particularly suitable when speed and immediate execution are crucial, prioritising trade completion over the specific price at which the transaction occurs. 

Whether it’s the Singapore Stock Exchange (SGX) or the bustling American markets, market orders play a significant role in facilitating quick trade execution. Traders can leverage market orders to take advantage of opportunities and adjust their positions promptly, enabling them to stay ahead in the dynamic and competitive financial landscape 


Working of market order  

When a market order is placed, the broker receives the order and immediately executes it at the best available price in the market. This means that the order will be filled at the prevailing bid price if it is a sell order, or at the ask price if it is a buy order. The execution price may vary slightly from the last traded price due to market fluctuations and the bid-ask spread. 

The bid price represents the highest price buyers are willing to pay for a security, while the ask price is the lowest price sellers are willing to accept. The difference between the bid and ask prices is known as the bid-ask spread and represents the cost of liquidity.

It is important to note that in highly volatile or illiquid markets, the execution price of a market order may deviate significantly from the last quoted price. This is referred to as slippage and occurs when there is a lack of liquidity or rapid price movements between the time the order is placed and executed. 


Example of a market order  

Suppose you are an investor looking to purchase 100 shares of XYZ Company. The current market price for XYZ is US$50 per share, with a bid price of US$49.95 and an ask price of US$50.05. 

To ensure quick execution, you place a market order to buy 100 shares of XYZ. The broker executes the order by purchasing the 100 shares at the best available ask price of US$50.05. As a result, the total cost of the transaction would be US$5,005 (excluding any fees or commissions) 

This example showcases how a market order allows you to swiftly enter or exit a position, ensuring immediate execution at the prevailing market price. 

Frequently Asked Questions

A market order is an instruction to buy or sell a security at the best available price in the market at the time of execution. It prioritises speed and immediate execution over the specific price of the trade. On the other hand, a limit order allows investors to specify the exact price at which they are willing to buy or sell a security. Unlike market orders, limit orders prioritise the price of execution over speed. Limit orders are placed on the order book and are only executed if the market reaches the specified price. 

A market order is a type of order in stock trading that instructs brokers to buy or sell a specified number of shares at the prevailing market price. It aims to ensure immediate completion of the trade, prioritising speed over the price at which the transaction occurs. 

To place a market order, investors can use online trading platforms provided by brokerage firms. They need to select the stock they wish to trade, specify the quantity of shares, and choose the market order option. Once the order is submitted, the broker executes the trade at the best available price in the market. 

A batch order, also known as a block trade or bulk order, involves the simultaneous buying or selling of a large number of shares or securities. It differs from a market order in terms of the quantity being traded. While market orders typically involve a specific number of shares, batch orders deal with a significant volume of securities in a single transaction. 

An after-market order, also referred to as an after-hours order, is an order placed outside regular trading hours. In the United States, the regular trading hours for major stock exchanges are typically from 9:30 am to 4:00 pm Eastern Time. After-market orders allow investors to place trades before the market opens or after it closes.  





Related Terms

    Read the Latest Market Journal

    Writing a Good Will: Avoiding Common Pitfalls (Part 2)

    Published on Jun 13, 2024 13 

    (This article doesn’t apply to foreigners nor our Muslim friends in Singapore.) Welcome to the...

    A Practitioner’s Perspective: Navigating Market Volatility, Uncertainty and Climate Change

    Published on Jun 12, 2024 68 

    In today’s dynamic financial landscape, investors face an array of challenges, including information overload, market...

    Investing in Tech Giants: Strategic Insights into Palantir, TSMC, and Microsoft

    Published on Jun 11, 2024 65 

    In the ever-evolving landscape of technology and data analytics, certain companies stand out for their...

    Weekly Updates 10/6/24 – 14/6/24

    Published on Jun 10, 2024 20 

    This weekly update is designed to help you stay informed and relate economic and company...

    Investing in Gold with Unit Trusts

    Published on Jun 7, 2024 115 

    When gold was first discovered about 4500 years ago, it was valued for its malleability...

    Weekly Updates 3/6/24 – 7/6/24

    Published on Jun 3, 2024 52 

    This weekly update is designed to help you stay informed and relate economic and company...

    World Environment Day – Investing in a greener future

    Published on May 31, 2024 118 

    What is it? World Environment Day is the UN’s largest global platform for environmental public...

    Water: Liquid investment opportunities

    Published on May 31, 2024 40 

    The Singapore International Water Week (SIWW) is a leading global platform for water industry professionals...

    Contact us to Open an Account

    Need Assistance? Share your Details and we’ll get back to you


    This material is provided by Phillip Capital Management (S) Ltd (“PCM”) for general information only and does not constitute a recommendation, an offer to sell, or a solicitation of any offer to invest in any of the exchange-traded fund (“ETF”) or the unit trust (“Products”) mentioned herein. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. You should read the Prospectus and the accompanying Product Highlights Sheet (“PHS”) for key features, key risks and other important information of the Products and obtain advice from a financial adviser (“FA“) pursuant to a separate engagement before making a commitment to invest in the Products. In the event that you choose not to obtain advice from a FA, you should assess whether the Products are suitable for you before proceeding to invest. A copy of the Prospectus and PHS are available from PCM, any of its Participating Dealers (“PDs“) for the ETF, or any of its authorised distributors for the unit trust managed by PCM.  

    An ETF is not like a typical unit trust as the units of the ETF (the “Units“) are to be listed and traded like any share on the Singapore Exchange Securities Trading Limited (“SGX-ST”). Listing on the SGX-ST does not guarantee a liquid market for the Units which may be traded at prices above or below its NAV or may be suspended or delisted. Investors may buy or sell the Units on SGX-ST when it is listed. Investors cannot create or redeem Units directly with PCM and have no rights to request PCM to redeem or purchase their Units. Creation and redemption of Units are through PDs if investors are clients of the PDs, who have no obligation to agree to create or redeem Units on behalf of any investor and may impose terms and conditions in connection with such creation or redemption orders. Please refer to the Prospectus of the ETF for more details.  

    Investments are subject to investment risks including the possible loss of the principal amount invested. The purchase of a unit in a fund is not the same as placing your money on deposit with a bank or deposit-taking company. There is no guarantee as to the amount of capital invested or return received. The value of the units and the income accruing to the units may fall or rise. Past performance is not necessarily indicative of the future or likely performance of the Products. There can be no assurance that investment objectives will be achieved.  

    Where applicable, fund(s) may invest in financial derivatives and/or participate in securities lending and repurchase transactions for the purpose of hedging and/or efficient portfolio management, subject to the relevant regulatory requirements. PCM reserves the discretion to determine if currency exposure should be hedged actively, passively or not at all, in the best interest of the Products.  

    The regular dividend distributions, out of either income and/or capital, are not guaranteed and subject to PCM’s discretion. Past payout yields and payments do not represent future payout yields and payments. Such dividend distributions will reduce the available capital for reinvestment and may result in an immediate decrease in the net asset value (“NAV”) of the Products. Please refer to <> for more information in relation to the dividend distributions.  

    The information provided herein may be obtained or compiled from public and/or third party sources that PCM has no reason to believe are unreliable. Any opinion or view herein is an expression of belief of the individual author or the indicated source (as applicable) only. PCM makes no representation or warranty that such information is accurate, complete, verified or should be relied upon as such. The information does not constitute, and should not be used as a substitute for tax, legal or investment advice.  

    The information herein are not for any person in any jurisdiction or country where such distribution or availability for use would contravene any applicable law or regulation or would subject PCM to any registration or licensing requirement in such jurisdiction or country. The Products is not offered to U.S. Persons. PhillipCapital Group of Companies, including PCM, their affiliates and/or their officers, directors and/or employees may own or have positions in the Products. Any member of the PhillipCapital Group of Companies may have acted upon or used the information, analyses and opinions herein before they have been published. 

    This advertisement has not been reviewed by the Monetary Authority of Singapore.  


    Phillip Capital Management (S) Ltd (Co. Reg. No. 199905233W)  
    250 North Bridge Road #06-00, Raffles City Tower ,Singapore 179101 
    Tel: (65) 6230 8133 Fax: (65) 65383066