Market Orders

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Market orders are the kind most commonly given when purchasing and selling stock. When you place a market order, you simply tell your broker to purchase or sell a certain number of shares. You do not specify the price or time frame within which you consider the purchase or sale acceptable. As discussed previously, the market order is assumed to be a day order, unless specified otherwise . The broker will go to the market, usually within a couple of minutes ”or in the case of e-brokerages, seconds ”and purchase or sell your stock at whatever price the stock is trading.

Plain English

Market orders, also know as open orders, instruct the broker to go to the market immediately and buy or sell shares at whatever price is currently being offered .

If the order were meant to be fulfilled immediately, would there be any reason for not making it a day order? Could it be anything else? Sometimes stocks may be difficult to sell or to find for purchase at given rates. For example, say you want to buy 100 shares of XYZ Company stock. Remember that XYZ Company issued a limited number of stocks to begin with, so there are really only 105 shares trading on the market. It's going to take your broker a lot longer than a day to track down those 100 shares for you to purchase ”if he or she is able to do it at all. In the case of selling, should your stock be unattractive, the broker may not be able to find someone who is willing to purchase it. In either case, you may wish to consider leaving the order open a little longer than a day by using one of the previously discussed notations.

As a side note, the broker doesn't really "go to the market." One thing those Wall Street movies do show realistically is that there are already far too many people on the Exchange floor. In addition, some of those markets aren't physically real, but we'll get into that later. Almost all transactions these days are handled by computerized systems, so your broker is free to conduct your business within the comfort of his or her office.

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