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Bybit Learn
Bybit Learn
17 Th03 2022

Market Order

In crypto trading, a market order enables investors to buy or sell digital assets at the current market price.

What Is a Market Order in Crypto?

A market order is a type of trade order that lets investors buy or sell their digital assets at the market’s current price. It’s one of the quickest, simplest and most common orders that investors can use when trading.

Unlike limit orders, by which trades can only be executed when set prices and amounts are met, a market order can be executed and filled immediately once it’s established. With a market order, investors can instantaneously trade their cryptocurrencies at the best possible prices on the current market.

The same concept applies to traditional trading, where investors can sell or purchase stocks at current market prices without considering how much a trader will pay for the sale or purchase. 

Market Order: Pros

Choosing to make a market order can be beneficial, especially for crypto traders who prefer short-term investment strategies or want to profit more quickly.

This is because they can buy or sell a specific asset without waiting until its value reaches a target price, since the current market is what sets the prices of the sale or purchase.

This also means that market orders are guaranteed to be filled, since they’ll be matched with the closest available limit order in the order book, which takes away their liquidity. 

Market Order: Cons

However, there are certain downsides to market orders as well. For example, a market order is more susceptible to slippage than a limit or stop order. 

This is especially true for larger orders, since it can be more challenging to fill them with limited liquidity on the market. This could mean that some of the matched orders will be priced lower than what was expected.

Larger orders will also take a more extended period to fill, and fluctuations in market prices can occur while the trade is being executed. The likelihood of this happening is even higher in the crypto market, since it’s considered fast-moving and highly volatile.

There’s also the risk of other types of trade orders being executed before yours, which can influence how much you have to pay. This could mean potentially higher losses if the difference between the market price and what you expected is significant.

Market orders also typically offer less control to traders, especially since they can’t be canceled once made because they’re executed immediately. Aside from that, larger volumes of market orders can also potentially impact the market’s prices, which can be both beneficial and disadvantageous for traders.

That’s why more traders choose to use limit orders instead of market orders. Limit orders allow for better control and flexibility, and are better-suited for traders who prefer to adopt more long-term strategies for their investments.

The Bottom Line

If you’d like to determine which type of trade order is more suitable for your crypto trading style, you can read more about limit orders here.