What Is a Market Order? | Binance Academy

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Market orders are a quick and efficient way to buy an asset at its best available price. How does it differ from a limit order? Find out here ⤵️

It's much simpler to see the relationship between a market maker and taker with the numbers, so let’s see an example. Imagine you want to buy 1 BNB, and the current market price is around $370 . You head to Binance and open the BNB/BUSD pair. To create your buy market order, you enter 1 in the amount field and click [Buy BNB].

After placing your order, the exchange looks at the order book. This ledger contains limit orders with a specific quantity and specified price to purchase or sell an asset. In this case, your market order to purchase 1 BNB at the market price will be matched with the lowest sell limit order on the order book.

As you can see, the lowest sell limit order on the book is for 1.286 BNB at $371.40 . Your purchase market order will buy 1 BNB from the 1.286 BNB on offer, giving you a spot price of $371.40. But let's say you want to buy 500 BNB at the current market price. The cheapest sell limit order available doesn't have the volume to fill your entire market buy order. Your market order's remaining volume will be automatically matched with the next best sell limit orders, working its way up the order book until it's totally filled. This process is calledTo briefly recap, limit orders are orders to buy or sell a quantity of a financial asset at a set price or better.

Market orders can only be filled with existing limit orders. Not everyone wants to take the price available on the market when trading or investing, so a limit order is a good alternative. You can use limit orders to plan out your trades in advance without needing to be at your desk trading.Fills immediatelyApart from these basic differences, market orders and limit orders are suitable for different trading activities and goals.

 

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