Content of this article:
When should you use a Market Order?
Looking for a general Spot Trading introduction and guide? Please refer to the article How to Do Spot Trading on XT.COM?
What is a Market Order？
A Market Order is an order to quickly buy or sell at best available price.
Traders are able to set Order Quantity, but not the Order/Executed Price. The order will be immediately filled at the best available price from the Order Book. The execution of a Market Order is guaranteed, however the executed price is not certain since the price may change quickly.
Since a Market Order will be matched with the best available price from the Order Book, consuming the liquidity from the Order Book, a Market Order will be charged with a Taker Fee.
How to use a Market Order?
*For demonstration purposes, we will only be showing you how to use a Market Order on the Pro Spot from web browser. The steps are nearly identical for Standard Spot and on the mobile app.
Let's say you want to purchase 50 USDT worth of XT immediately, regardless of the executed price. You may use a Market Order.
- Step 1: From the trading panel, go to the order area. Select 'Spot' and 'Market Trade'. Input the amount and click 'Buy XT'
Since a Market Trade Order will be executed immediately at best available price, your Market Buy Order will be matched the best selling price in the Order Book, 3.1216 USDT per XT.
However, if you would like to buy 10,000 USDT worth of XT with a Market Order, and the quantity in single best available price (3.1266 USDT in this case) is not sufficient to fill your entire market buy order, your order will automatically be matched the following best available price (3.1279 USDT in this case), working its way up the Order Book (3.1279 USDT onwards in this case) until it is fully filled.
This scenario is known as slippage, as the final executed price will be slightly higher than the market price when you placed the order.
When should you use a Market Order?
Market Order are handy in situations where getting your order filled is more important than getting a certain price. This means that you should only use a Market Order if you are willing to pay higher prices and fees caused by possible slippage. In other words, a Market Order should only be used if you are in a rush.
Sometimes you might be in a situation where you had a Stop-limit Order that was passed over, and you need to buy/sell as soon as possible. So if you need to get into a trade right away or get yourself out of trouble, that's when market orders come in handy.
However, if you're just coming into crypto for the first time and you are using Bitcoin to buy some altcoins, avoid using market orders because you will be paying way more than you should. In this case, you should use Limit Orders.
Note: If the amount of a Market Order is too large, there will be a case of partial cancellation of the unfilled order. At the same time, the Market Order will sweep the market regardless of the cost, and you will be taking some risks. Please stay alert in placing orders.