What is a Market Order (MO)?
A MO helps customers buy or sell stocks at the prevailing market price immediately without setting a limit price. This order will be placed at the prevailing market price by default.
The filled price may deviate considerably from the expected price at time of placing such order. The order processing time required will depend on the prevailing market situation and the number of orders that need to be processed. The possible delay in order processing could incur great loss, and you are advised to enquire the order status after placing the order.
A MO will be sent to the market in the form of Special Limit Order during continuous trading session. The order price will be set as the prevailing best bid price (for sell orders) / ask price (for buy orders) for matching at the time of order submission by you. Any unexecuted unfilled quantity of the order after matching will be cancelled immediately. Under a fluctuating market, the order may be rejected or unexecuted unfilled if (but without limitation to) the prevailing best bid price goes down (for sell orders) / ask price goes up (for buy orders) before the order is sent to the exchange successfully leading to unmatched orders and hence immediate order cancelation (due to feature of Special Limit Order).
The below example illustrates the details of a "buy" market order for a particular stock:
The price queue of the stock in 15 spreads are shown below:
Nominal Price = 1.01
Market Order Spread = 10 spreads; the Upper Limit Price = Nominal Price + 10 spreads = 1.11
Quantity = 20K
Orders sent to the market:
Executed Quantity (Price)
Total Executed Quantity
1. Buy 20K at 1.11*
2. Buy 8K at 1.11*
* Remarks: orders will be sent to the market in the form of a Special Limit Order.
The order is closed with a partially executed status (with a total executed quantity of 18K) and the outstanding quantity of 2K will automatically be cancelled. That means a market order will be executed for the largest quantity possible until reaching the limit price (i.e. 1.11) and the outstanding unexecuted quantity will automatically be cancelled.
Since the upper limit price of a Market Order can only be set within 10 spreads below or above the prevailing bid/ask price respectively at the time of execution, the order may be rejected or unexecuted if the market price fluctuates beyond the said price spreads (i.e. 10 spreads).
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