What type of order executes a trade at the next available price?

A market order is a type of trade order that is executed immediately at the best available price in the market. This type of order does not specify a price limit, which means that the investor is willing to accept the current market price, regardless of fluctuations. When a market order is placed, it takes precedence over other types of orders, leading to a quick execution, making it particularly useful in fast-moving markets where timely action is critical.

In contrast, other types of orders have different mechanisms. For instance, a limit order sets a specific price at which the investor is willing to buy or sell, and it will only be executed if the market reaches that price. A stop order becomes a market order once a specified stop price is reached, which can introduce delays and execution beyond the intended price in volatile conditions. A pending order is not executed until certain conditions are met, which means it lacks the immediate execution feature of a market order.

Overall, the defining characteristic of a market order is its execution at the next available price, which is critical for investors seeking to enter or exit positions swiftly.