Market orders are the most commonly used order type in trading as they offer a quick and straightforward way to enter or exit positions at the current market price. When a trader submits a market order, the broker immediately attempts to execute the order at the best available price.
Market orders do not specify a price, so traders accept the risk of receiving a less favorable price due to market fluctuations. They are handy in situations where getting your order filled is more important than getting a specific price. However, they come with potential drawbacks such as price uncertainty, slippage, and a lack of control over entry and exit points.
To mitigate these risks, traders should carefully monitor market conditions, utilize other order types when necessary, and refine their strategies based on experience and market analysis.