Key Terms
Market order
An instruction to trade immediately at whatever price the market currently offers, fixing the timing of execution but not the price received.
By the Investfora Research Desk
A market order is an instruction to buy or sell immediately, at whatever price the market offers at the moment the order arrives. It fixes the timing and leaves the price open: in a normally functioning market the trade happens at once, but the executed price is whatever is available, which may differ from the last quote seen. The faster the market is moving, and the thinner its trading, the larger that difference can be.
A worked example
Suppose a share last traded at a hypothetical £100, and an investor places a market order to buy 100 shares. The lowest offer available at that instant is £100.40, so the order fills there. The purchase costs £10,040 rather than the £10,000 the last trade implied — £40 more, incurred not as a fee but simply as the price of trading now.
A market order settles whether the trade happens, not what it happens at. The quote seen at the moment of ordering is already history by the time the order executes, and the order carries no protection against filling at something worse.