Forex trading requires knowledge and understanding of various terms and concepts. One such concept is a market order. In this article, we will discuss the ins and outs of market orders, including how they work, their advantages and disadvantages, and how they compare to other types of orders.
A market order is an instruction given by a trader to their broker to execute a trade at the current market price.This means the trade will be executed immediately, without delay or waiting for a specific price point.
Market orders are commonly used by traders who want to buy or sell currency quickly and efficiently without missing out on market movements. However, market orders have limitations and serious disadvantages, like possible slippage. This order type is amazing for those who aim for speed and are ready to lose some points of profit because, in return, they get much more.
When a trader places a market order, their broker will execute the trade at the best available price in the market. This means that the trader will get the currency at the current market price, regardless of whether it has gone up or down since they placed the order.
The trade is executed almost instantly, and the trader will see the currency in their account shortly after. For example, in FBS, 95% of orders are executed within 0.4 seconds, a lightning-fast speed that means your market order will be opened at the price very close to what you’ve seen before opening the trade.
For example, you want to enter or exit the market quickly. That’s where market orders come in handy. They are ideal for traders who are not concerned about the price at which the trade is executed, as they are willing to buy or sell at the current market price.
Market orders are also useful in fast-moving markets where prices can change rapidly, as they ensure that the trader does not miss out on any market movements.
The price may skyrocket or plunge incredibly fast whenever impactful news comes out. These movements can be exactly what a trader wants, so they don’t want to miss it. On the other hand, it’s hard to catch the price with a limited order (we’ll talk about this order later in this article). That’s where the market order helps.
One of the main disadvantages of the market order is that the trader has no control over the price at which the trade is executed. If the market is volatile, the trader may end up paying more or receiving less for their currency than they had anticipated. Additionally, market orders are subject to slippage, which is the difference between the expected price and the actual price at which the trade is executed.
Still, we would like to note that FBS uses no requotes. It means that when you place an order, it’s executed at the factual market price. In other words, your order goes straight to the liquidity provider, where it gets executed. It helps us to maintain the highest possible price match with the actual prices. You can be sure that with FBS you get what you expect to get. Read more about the FBS execution policy.
A limit order is an instruction given by a trader to their broker to buy or sell currency at a specific price point or better. This means that the trade will only be executed if the price reaches the specified level.
Unlike market orders, limit orders give traders more control over the price at which the trade is executed, but they may also result in missed opportunities if the price does not reach the specified level.
Suppose a trader wants to buy 1000 units of USD/JPY at the current market price of 109.50. They place a market order with their broker, who executes the trade almost instantly at the best available price in the market. If the price manages to stay at this level for around 0.4 seconds, the trader will get an order with an opening price of 109.50. In another case, the trader may see an opening price close to the original one, like 109.45 or 109.55, depending on the current market conditions.
Market orders are a powerful tool in forex trading, allowing traders to enter or exit the market quickly and efficiently. They are ideal for traders who are not concerned about the price at which the trade is executed, and who want to take advantage of fast trades.