How do market orders fill?

1.  Definition of market orders

A market order is a request to immediately buy or sell at the most favorable price available. This type of order is fulfilled by matching it with existing limit orders in the order book, thereby relying on market liquidity for execution.

2. How do market orders fill?

Unlike limit orders that are placed on the order book and wait for someone to execute them, market orders are executed immediately at the current market price. Therefore, when executing a market order on the LeveX exchange, you will pay trading fees as a Market Taker.



As market orders execute immediately, they match with the best available limit order on the order book. For instance, a market buy order will match with the best limit sell orders at the current price. However, if the lowest limit sell order doesn't cover your entire market order, it will proceed to match with subsequent limit sell orders until fulfilled. This phenomenon, known as slippage, explains why market orders often incur higher prices and fees compared to limit orders.

When getting your order filled quickly is more important than getting a certain price, market orders are useful. This means that unless you are in a hurry and are willing to pay higher prices and costs (due to slippage), you should only use market orders. To put it another way, market orders should be assigned to situations in which you need to buy or sell something fast, regardless of price or fees.