Order Types

The MARKET ORDER is the simplest type: it enters IMMEDIATELY at the best available price. It is an aggressive (taker) order — it crosses the spread and takes liquidity from the book. ✅ WHEN TO USE IT: • You want to enter or exit immediately — execution speed is more important than exact price. • The market is very liquid (EUR/USD, S&P 500, AAPL) — the book is deep and slippage will be minimal. • You are closing a losing position that has hit your stop — get out now, do not quibble over a tick. ❌ WHEN NOT TO USE IT: • Illiquid or low-volume assets — the book is thin and a market order can slip several percent. • During important economic announcements — spreads explode to 10–20x normal and a market order fills at a catastrophic price. • When price is moving rapidly — you can get significant slippage, paying far more (or receiving far less) than the screen price suggested. SLIPPAGE: the difference between the expected price (the screen price when you clicked) and the actual execution price. With market orders in fast or thin markets, slippage of 5–10 pips on FX or 0.5–2% on stocks is common — and it is always against you, because you only hit market when you need urgency, which is exactly when the book is widest. The taker/maker economics: a market order takes liquidity, and on most modern venues that means paying a fee (the taker fee) in addition to the spread. A limit order that provides liquidity earns a rebate (the maker fee, often negative — i.e. a credit). Over thousands of trades, the taker/maker cost difference is material; scalpers and high-frequency strategies are built on providing, not taking, liquidity. The institutional caution: market orders should be a small minority of a discretionary trader's orders. The default is the limit order (which controls price). The market order is reserved for the cases where urgency genuinely matters — stops being hit, a fast market break you must participate in, or closing a position at the end of a session. Using market orders as the default is paying the spread and the taker fee on every trade, a structural drag that compounds.