Market order is a buy or sell order request to be executed immediately at the best available price in the current market. Market order is among the most adopted order types on OKEx, as it is easy to use and has a higher certainty of execution.
While market order varies in the traditional stock market, they function differently in the crypto space. For example, a traditional Fill-Or-Kill (FOK) order and Immediate or Cancel (IOC) order are referred to as advanced limit orders on OKEx due to a number of crypto market features, such as 24/7 trading, a lower market depth, and an absence of a limit up-limit down rule and a circuit breaker system.
These market specialties do not affect the wide application of market orders. OKEx’s market order function basically applies to spot and margin trading. Compared with derivatives trading, margin trading does not lead to a higher trading cost caused by volatile trading prices by 5x leverages; while the estimation of open and close prices and the use of high leverages may result in significant losses and higher market volatility while placing market orders in derivatives trading.
Therefore, market order is not available in derivatives trading, but users may use best bid price to place order. OKEx offers 6 types of algo orders apart from market order for derivatives trading, including limit order, advanced limit order, stop loss and take profit order, trail order, iceberg order and time-weighted average price (TWAP) order.
When to Use Market Order?
As there are certain requirements on orderbook depth and spread for placing market orders, although such placement ensures swift execution, its transaction price does not benefit market order users. For most of the time, the execution price does not equal to the best available price. Therefore, placing a market order in a market with low trading volume, low liquidity and lack of price discovery in spot or margin trading will result in higher transaction fees. Yet market order is useful when traders prioritize immediate execution over the increase in transaction fees.
Market orders allow for prompt and high certainty of execution. When the market fluctuates greatly and traders are chasing the market, market orders can be executed quickly at best available prices in most cases, which effectively reduces the possibility of execution failure and can stop loss compared to using other types of orders. However, market orders cannot be executed at specific prices, users tend to buy high when the asking price is higher than the market price, or sell low when the selling price is lower than the market price.
Traders should consider the pros and cons before using market orders to avoid any asset loss.
Disclaimer: This material should not be taken as the basis for making investment decisions, nor be construed as a recommendation to engage in investment transactions. Trading digital assets involves significant risk and can result in the loss of your invested capital. You should ensure that you fully understand the risk involved and take into consideration your level of experience, investment objectives and seek independent financial advice if necessary.
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