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The Assets and Liabilities of Market Orders If you call the order in to a broker, you now have two choices. Depending on the type of trading you do and the type of broker you have, you either hang up the phone or you hold on for your price fill. When your broker receives the order, she writes an order ticket containing your account number and specific order. The ticket is then time stamped, and the broker enters your order on her electronic order entry terminal and then waits for a price execution. More often than not, your SSF order will be filled and reported back to you in less than one minute, assuming that the SSF you picked is reasonably liquid (i.e., has sufficient trading volume). If, on the other hand, you place your order online, bypassing the physical broker, your order, assuming good liquidity and trading volume, could be filled and reported back to you in a matter of seconds. The OneChicago market has structured the SSF exchange so as to give fair and equitable price execution through its system of market makers. This means that your order will, theoretically, be filled at a price that is reasonable within the constraints of the bids and offers for the given SSF. Nonetheless, market orders, even when entered electronically, still have their assets and liabilities (as do all order types). from each other. If you place an order to buy or sell at the market, the odds are you may be filled at the high bid when buying and at the low offer when selling A market order is an order to buy or sell at the prevailing price, regardless of what that price may be. The good news is that your at- the-market order gets filled; the bad news is that you may not be pleased with the price you get, as you wanted to buy or sell at the prevailing price. Given the liabilities of market orders, I recommend that you avoid such orders unless it is absolutely necessary for you to enter or exit a trade. As a result, at-the-market orders are best used for short-term and day traders who do not have the time to wait for a market to come to their buy or sell prices. The advantage of a market order is speed of execution, but this is also the disadvantage. As with all things in life, we pay for our impatience either physically or emotionally or both. Don't use an at-the-market order unless you must. Finally, don't use a market order in SSFs that trade a very small number of contracts. The reason you want to avoid market orders in such cases is that the bids and offers for the SSF could be far removed stock investment ~ forex signal |