📘 #educational Post:
What Is a Market Order?
A market order is an instruction to buy or sell an asset immediately at the best available price. It is fulfilled by matching with existing limit orders on the order book, meaning its execution depends on the current market liquidity.
Unlike limit orders, which are placed on the order book and executed only when the market reaches a specified price, market orders are executed instantly at the prevailing market rate. On platforms like Binance, placing a market order classifies you as a market taker, which typically incurs higher trading fees.
When you place a market order, the system matches it with the best available limit orders. For example, if you submit a market buy order, it will match against the lowest-priced limit sell orders. If the order book doesn't contain enough volume at that price to fill your entire order, the system continues matching your order with the next best-priced limit orders until it is fully filled. This process is known as slippage, and it can result in less favorable prices and higher fees compared to limit orders.
Market orders are best suited for situations where speed of execution is more critical than price. They are ideal if you're in a hurry to enter or exit a position and are willing to accept potentially higher costs due to price fluctuation and slippage. In short, only use market orders when immediacy outweighs cost considerations.