Q&A: When to use market orders (never)

Q: I have trouble getting fills on fast-moving stocks. Should I use market orders?
A: No. See the video for details.

Disclosure: No positions in any other mentioned. This blog has a terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.

11 thoughts on “Q&A: When to use market orders (never)”

      1. I only looked at it on my blackberry last night, and I was thinking, hmm I GOTTA check out the video if Reaper is going to explain why to NEVER use limit orders 🙂

  1. I’ve read from number of books that recommend using market orders for when you want to get out ASAP when a position is going against you. Would you still not use/recommend in these situations?

  2. Would a market order be more efficient in getting out of or avoiding a panic in a pumped OTCBB stock? Risk is being a trade-through victim (but I have never met anyone who’s had that experience) but it might be better than resetting a limit order constantly.

    1. No … a limit order is better. If there is a true panic (like with NXTH) then very few orders will be filled until the bottom, leaving no advantage in speed to a market order.

  3. You’re right, I made this mistake in my first trades but I get nervous all the time because my experience with my very big loss for the moment with MCGI, my fault not to have Level II and play OTCBB.

    Let’s share my experience:
    When it began to tank I made a limit order to sell at 2.10, but it went below, then I canceled, another to 2, went below, then cancel it, another to 1.90, went below, finally in panic, I wrote a 1.72 limit order and get filled at 1.73. I’m afraid because I lost a lot of time canceling in SogoTrade because reuse didn’t worked while it tanked.

    We don’t know but, with MCGI I wished to sell with a market order because I wanted to sell when it was at 2 and finally, I’d filled it at 1.73.

    (sorry if I wrote something weird with my English, sometimes I’m not sure about a verb use)

    1. I wanted to share a winner too, with HAUP I made a long trade from limit order 4.25 to 4.65 but I wanted to go out at 4.50 and my Internet connection crashed for a minute, I saw it at 4.65 and as I wanted to go out at 4.50 I used a market order.

      What is the best thing to do in this case? a limited order of 4.50 when the stock is 4.65 but you wanted to sell at 4.50? Doesn’t it affect at the stock movement ? Thanks Reaper, I appreciate your job with this blog, I enjoy a lot.

      1. For a stock like HAUP it is very liquid so you will generally be fine using a market order. You may pay an extra couple cents, but you will get a fast fill.

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