What does a market order allow an investor to do?

A market order is a type of order that allows an investor to buy or sell a security immediately at the current market price. This order type is designed for speed and ensures that the trade is executed as quickly as possible, which is particularly useful in fast-moving markets where prices can change rapidly.

When an investor places a market order, they are prioritizing the execution of the trade over the specific price at which the trade occurs. This means that the order will be filled at the best available price in the market at the time the order reaches the exchange. Since the primary goal of a market order is to fill the order promptly, it is particularly advantageous when an investor needs to act quickly, such as in response to news or changing market conditions.

Market orders contrast with other types of orders, such as limit orders, which specify a price at which an investor is willing to buy or sell. With a limit order, there is no guarantee that the order will be executed if the market price does not reach the specified level. Therefore, while market orders provide the benefit of immediate execution, they may result in an execution price that is different from what the investor had anticipated, especially in volatile markets.