After the previous discussion on market order, now we will discuss the further strategy to buy or sell the stock. When you use a market order, your order will get prioritized by the system. Yet, you still need to know when to use the market order, in order to gain the maximum profit.
When to use it?
If you are in a bad position and the market is moving against you, then you have to exit in a hurry by using a market order. Do not worry about the slippage, you have to focus on losing a lesser amount of money.
Similar to most of the investors, you may concern so much on controlling entry and exit prices. However, there will be times when buying or selling the stock quickly becomes more important than price.
Thus, it becomes dangerous when you convince yourself that you have to own a hot stock at any cost and use it to grab shares.
With high-speed innovations, now small market orders can zip into the market without much warning and be filled.
Investors, nowadays, no longer need to concern so much with a few cents’ loss to slippage. But, you must be careful, or it can be much worse than pocket change.
Placing a Market Order
If you are going to give a verbal order to your stockbroker, then what you say should go like this: “Buy 200 shares of IBM at the market price.”
On the other hand, “Sell 200 shares of IBM at the market” is what you have to say to sell a stock.
Assuming you use an online broker, you’ll see the order entered on the order screen. If the stock is actively traded, a market order will be filled almost instantly. But, if there is an unusually high volume in this particular stock, then you need to wait.
However, in a fast-moving market even almost instantly isn’t fast enough to ensure you receive your placed price.