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What Is Market Order? How Does It Work in the Crypto Market?
Intermediate
2025-06-19 | 10m
Market order refers to the immediate purchase or sale at the currently valid
real-time price. Cryptocurrency. Market orders are executed based on the limit orders that have been placed in the order book, which is what is called "taking" each limit order in the order book. This means traders cannot be 100% sure of the true transaction price. Slippage occurs when the actual price differs from expectations. The biggest advantage of a market order is that it can execute an entire order relatively quickly, simply and directly, especially when your requirements for slippage are not particularly high.
Why Are Market Orders So Important?
Market orders are crucial to the spot market because their users are ready to give up their edge in trade for reasonable prices. On top of this, traders that place market orders are not looking for free trades. They need fast trading execution to meet their trading goals. Consequently, market orders have a transaction charge. These traders pay a fee to access liquidity. To this end, market orders are a vital element of the spot market.
They are crucial to the health of the symbiotic relationship that exists between a spot market’s liquidity providers and market order traders.
Where Are Market Orders Placed?
Market orders are common buy and sell requests in spot trading. Spot trading is the sale and purchase of financial assets and instruments. It takes place in spot markets. Spot market systems settle most market orders instantly. A spot market, like any open market, has different types of traders.
Types of Traders in a Spot Market
There are two main types of traders in a spot market, as listed below.
Market Makers
The spot market has market makers that bring in liquidity in the form of financial assets. Market makers can be buyers or sellers. They purchase or sell financial assets at the best offer or bid. Consequently, market makers ‘make’ a market that reflects the buy or sell price they set.
Brokers use their assets to execute market order trades. Most market makers are short-term traders and are in it to earn a profit from the spread. They are also arbitrageurs.
Market Takers
Market takers visit spot markets seeking liquidity. They want their buy or sell orders settled as quickly as possible and so set market orders.
Are There Other Trading Orders?
Aside from market order, there are two other basic order types that all traders should be aware of. Please note that the market order, the stop market order, and the limit order have different trading outcomes, so you should use each of them as a means to end. They are tools you can leverage to meet your trading goals.
Limit Order
The spot market’s liquidity providers place limit orders. Limit orders are a command to sell or buy assets at a pre-set price. These commands will only execute when cryptocurrencies are transacting at the limit price.
Stop Market Order
A stop market order is a buy or sell command that executes when a financial asset trades at a specific price in the future. This set price is the stop price.
What Does Market Order Mean in Crypto?
Market orders are basic cryptocurrency trading orders. Use them to make a quick sale or purchase by simply clicking the buy/sell button. The automated platform will settle your order instantly by seeking the nearest market maker's ask price.
As an illustration, set a Bitcoin market order, and the automated platform will sell your BTC at the nearest market bid price. Essentially, you are buying your BTC at the price that other traders have set.
Market vs. Limit Order in the Crypto World
A purchase or sale of cryptocurrency on an exchange at the current best available price. Market orders are filled as buyers and sellers are willing to trade. This is in contrast with limit orders at which cryptocurrency is sold only at a specified price.
When to use market orders?
If you value the execution of this order more than its transaction price, it is recommended to choose a market order at this time. For example, sometimes a Limit Order cannot be filled for a long time, but you may be anxious to complete the transaction as soon as possible so that you can get out of it. Market orders can come in handy.
However, if you want to buy some small currencies, it is not recommended to use market orders. Due to slippage, your purchase may cost more than expected. A limit order may be a better choice at this time. Note: When trading highly liquid assets with a small bid-ask spread on the order book, using a market order can get you a price close to or equal to the expected price. The wider the bid-ask spread, the higher the risk of slippage and rising costs.
Benefits and Disadvantages of Market Orders
While they have their benefits, market orders have their disadvantages. When you place a market order, you stand a higher chance of having your order executed fast. That said, market order trade execution time is not guaranteed.
When market liquidity drops, your market order could remain on hold as the market process orders as per its priority guidelines. This feature will expose your order to slippage and exchange fees. To offset these fees, use market orders when you are making voluminous trades. On top of this, use them when you are in a rush or when you are ready to pay more to execute an order.
How Crypto Social Trading Can Help You Trade Wisely
CoinCatch is an advanced cryptocurrency trading exchange platform that has crypto derivatives and crypto social trading features.
We invite you to try out our ‘copy trade’ function that allows you to copy order placements of veteran crypto traders. Our platform mirrors their trading strategies and, by doing so, enables you to trade just like a pro.
CoinCatch Team
Disclaimer:
Digital asset prices carry high market risk and price volatility. You should carefully consider your investment experience, financial situation, investment objectives, and risk tolerance. CoinCatch is not responsible for any losses that may occur. This article should not be considered financial advice.
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