What is a market order and how do you use it?
A market order is a quick order that is easy to place. To place it, you need to specify the desired amount of coins/tokens you wish to buy/sell and click the Buy or Sell button. The order will be executed immediately.
Pros of market orders:
- they are easy to place;
- they are convenient to use when you need to quickly buy or sell a coin/token.
Сons of a market order:
- they cannot be canceled;
- they do not necessarily maximize profit and should be used only when the exchange rate is more important than the terms of the transaction.
Market Order Risks:
Buy and sell bids are constantly changing due to trades and orders execution. There is no price limit set in a market order, so the results of the deal depend on which order was triggered earlier — your’s or someone else's. In some cases, you will spend more than you bargained for. In others, you will spend less. To reduce risks, it is important to look at the next five or so buy orders (if you are selling) or sell orders (if you are buying) in the order book and think about how profitable the deal will be for you — if you do not have time to complete it at the best price.
Example 1*:
You want to quickly sell 1 ETH for USDT. The price of the last deal is 700 USDT, and there is a suitable order to buy ETH at the price of 700 USDT in the order book. You place a market order, it is immediately triggered. You sell your ETH for 700 USDT.
Example 2*:
You want to quickly buy 1 BTC for USDT. The price of the last deal was 17,900 USDT. Now there is an order in the order book to sell 2 BTC at 18,000 USDT. The following orders sell BTC more expensive: 0.3 BTC at 18,500 USDT and 5.4564 BTC at 18,850 USDT.
You place a market order to buy 1 BTC. However, someone has already bought 1.5 BTC at 18,000 USDT. Your order is triggered, buying the remaining 0.5 BTC for you at 18,000 USDT, and redeeming bitcoins from the following orders at a different price until it reaches the amount you need (1 BTC):
- 0.5 BTC x 18,000 USDT = 9,000 USDT;
- 0.3 BTC x 18,500 USDT = 5,550 USDT;
- 0.2 BTC x 18,850 USDT = 3,770 USDT.
The average price of 1 BTC with such a purchase was 18,320 USDT — that is, 420 USDT higher than the price of the last deal before placing the order and 320 USDT higher than the price you expected.
* Fee is not included in these examples. Please note that in a real trade a fee will be charged.
Features of the percentage buttons for the market order
At the moment of pressing the button, an approximate amount of a coin / token is displayed — calculated based on the last transaction price in this trading pair and your balance. If the situation in the order book changes, you can get a smaller amount of coin / token when buying, but all funds will be spent.
Example 3*:
You have 2,400 USDT on your balance and you want to spend a quarter of this amount to buy ETH. When 25% button is pressed, the amount of 2 ETH was set (the price of the last deal was 300 USDT for 1 ETH). But the volume of ETH sold at that price was not enough, and your market order made up for the shortage by buying from the following orders. The average price of 1 ETH for such a purchase was 320 USDT. Therefore, you did not spend 600 USDT, as you expected, but 40 USDT more.
Example 4*:
You have 2,400 USDT on your balance and you want to spend all this amount to buy ETH. By pressing the MAX button, the amount of 8 ETH * was set (the price of the last deal was 300 USDT for 1 ETH). But the volume of ETH sold at that price was not enough. Your market order tried to buy additional ETH from the following orders, but could not buy the required amount: they sold ETH at a higher price. Therefore, you spent all your USDT, but bought 7.5 ETH, and not 8, as you expected, since the funds on your balance were only enough for 7.5 ETH.
* Fee is not included in these examples. Please note that in a real trade a fee will be charged.