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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?
- Social Studies / Finance
- Finance / Financial Responsibility
- College and Career / Personal Finance
- Life Skills / Personal Finance
- Finance / Finance Definitions
- Life Skills / Finance Definitions
- Finance / Personal Finance
- Courses / Finance Concepts
- Subjects / Finance and Economics
- Finance and Economics / Terms and Concepts
- Terms and Concepts / Investing
- Terms and Concepts / Stocks
- Terms and Concepts / Trading
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]
Full Transcript
- 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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