It guarantees the fill, not the price
This trade-off is the whole idea: a market order buys you certainty of entry and pays for it with uncertainty of price. In a deep, quiet market the difference is cents; in a news moment it can be dollars.
The reason is that the price on your screen is the best quote standing right now, and it can disappear before your order arrives. See slippage and liquidity — together they explain everything that happens to a market order.
Price versus certainty
Order types are not a list to memorise but three questions: when do I get in?, when do I take profit?, and when do I get out at a loss? Each order type answers one of them.
This family works from one moment: gold at 2,400.00. A market order buys now; a limit order waits at 2,380 for a better price that may never come; a stop order buys at 2,420, a worse price bought with confirmation. The difference is not technical — it is an explicit trade of price against certainty.
A worked example
Gold at 2,400.00 with a 30-cent spread. A market buy fills near 2,400.30 — the ask, not the bid. On 0.10 lots (10 ounces) that is $3 of entry cost before any movement.
Send the same order two seconds after a US inflation release and it might fill at 2,401.20 or 2,398.50 — because liquidity withdrew, not because the broker interfered. That difference is not a fixed cost but a consequence of the moment you chose.
Common mistakes with this term
- Using a market order at a news release then blaming the broker, when the slippage follows naturally from withdrawn liquidity.
- Assuming the quoted price is the fill price; the quote can vanish before the order arrives.
- Using it on thin instruments or quiet hours, doubling entry cost for nothing.