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Intro to Stock Trading

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Market Orders
Market Order Stock Trading

A market order is the simplest type of stock trade you can place with your broker. It means that if you want to buy or sell 100 shares of a stock, for instance, it will get transmitted to the exchange and the order will be filled at the current price.

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The simplest and most common type of stock trade is a market order. Market orders simply tell your broker that you are willing to take whatever price is presented to you when your order is executed. These orders are often subject to the lowest commission since they are the easiest to execute.

Imagine you want to buy 100 shares of Apple Computer, Inc. (Symbol: AAPL). The current market price is $53.95. You log into your brokerage account or call your broker directly on the phone and tell him, “Place a market order for 100 shares of Apple Computer, ticker symbol AAPL”. By the time the order is actually executed a few seconds later, the market price may be higher or lower; $54.10 or $53.75 for example. Your cost before commissions will vary accordingly. In our example, the difference between $5,410 for the round lot and $5,375, or $35. That may not seem like much, but thanks to the time value of money, those savings can result in a substantially larger nest egg.

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