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Finance: What is a market order? 3 Views


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Description:

A market order is a type of buy or sell order, but wouldn't it be more appetizing if it was fresh fruit, or smoked salmon, or any other delicious thing you can get at a market?

Language:
English Language

Transcript

00:00

Finance a la shmoop what is a market order? alright people it's a type of buy

00:08

or sell order which simply says I will buy or sell this stock or bond at this

00:14

price right now that is whatever price the market is telling me it's worth [Investor discussing market orders]

00:18

right now that's my price so the market prices change all the time and yes of

00:23

course the broker can choose to look at his screen this minute or that minute or [Broker looking at computer screen]

00:27

the following minute and the market will be changing if you're placing the order

00:31

during the day so yes there is some discretion in defining exactly what

00:37

dollar amounts and penny amounts a market order means but in real life

00:41

usually through online portals or even through old-school telephones yes those [Person using an old-style telephone]

00:46

things the broker will say something like yep I see coca-cola quota here at

00:51

42.48 that's market right now you want it and if you want to sell well then you [Woman selling bonds while on the phone]

00:56

mumble something like go ahead and just so you know the kissing cousin of a

01:01

market order is a limit order like an investor might tell the broker give me a

01:06

42.50 limit on that coke sale if the stock never hits 42.50 like it's

01:12

below at 42.49 doesn't do it well then no sale ever happens and the [Coca cola stock price graph stamped with no sale]

01:17

owner of those coca-cola shares well they just keep them if the stock

01:20

suddenly pops and it gets there then blam the shares have been sold well in

01:24

practice most relatively sophisticated buyers and sellers put in limits like

01:30

limit orders not just naked market orders even if they are below what the

01:34

market currently floats because flash crashes happen all the time it seems

01:39

these days and in one fleeting moment shares of coca-cola could suddenly [Coca cola share price drops]

01:43

plummet to 34.12 a share and if the seller has a market order in while those

01:49

shares will transact or be sold at 34.12 even though 15 minutes later the markets

01:55

back to its 42.50 a share pricing so you can get really heard if you rely on

01:59

the market being a stable and rational so vanilla pure market orders can be a [Man with pigs head riding a bike]

02:04

dangerous thing be careful just ask the little piggy you know who went to market

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