What is Market Order


A market order lets you buy or sell crypto instantly at the real-time price currently available. A market order is executed based on the limit orders already placed on the order book. You cannot control the price you get. Slippage occurs when the order is executed at a price different from what you expected. But setting a market order is your best option if you want to buy or sell immediately with a relatively higher tolerance for slippage.

Binance's market order type in spot trading of BTC-USDT pair

Limit orders differ from market orders as you can place limit orders in advance with a set price. The exchange will only fill your order at the set price or better. We will expand on this part later.

How does a market order work?

There are two sides to a trade, the maker and the taker. When you place a market order, you (the taker) are taking the order set by someone else (the maker). 

For example, in the Binance BTC-USDT spot market, the current price of BTC is 28,829.34 USDT. If you place a market order to buy 1 BTC, Binance will immediately match the purchase market order to the lowest ask price on the order book below, which is 28,829.34 USDT/BTC. In this case, if you place a market order to buy more than 3.8 BTC in total (there are only 3.8 BTC left at that price), Binance's matching machine will automatically help you take away all available BTCs at the lowest price, 28,829.34 USDT/BTC, and the rest will be filled with the nearest lowest price on the order book one level by another and so on until all your orders are filled. Hence, the average filled price of your order may not be exactly $28,829.34. It could be higher.

Source: Binance

The main advantages of market orders are: simplicity, immediacy, efficiency, and ability to, in most cases, completely fill. However, market orders are at a disadvantage due to the risk of slippage and the fact you need to be present when executing the order.

When to use a market order?

  • Market orders are handy when filling your order is more important than getting a specific price. You should only use market orders if you are willing to pay a higher cost caused by the slippage. In other words, market orders are helpful if you're in a rush.
  • Sometimes you might be in a situation where you had a stop-limit order that was passed over, and you need to buy/sell as soon as possible. So if you need to get into a trade immediately or get out of trouble, that's when market orders come in handy.
  • However, if you're not a complete beginner to crypto and want to purchase some altcoins with your Bitcoin, avoid using a market order because you might pay more than necessary. In this case, a limit order is probably better.
  • When trading highly liquid assets with a narrow bid-ask spread, a market order will get you a price close to or at the expected spot price. Assets with a larger spread have a much higher chance of causing slippage.


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