Market order in gold trading

A market order is an instruction to buy or sell now, at whatever price is currently available. It is the simplest order type and the one behind the Buy and Sell buttons on most platforms. The fill is almost certain; the price is not, because by the time the order reaches the server the quote may have moved.

How it applies to gold trading

In a calm London morning a market order on XAUUSD fills at or within a cent or two of the displayed price. In the seconds after a US data release it can fill several dollars away. A buy market order sent at 4,000.30 that fills at 4,002.10 has $1.80 of slippage, which on one standard lot is $180 before the trade has started.

Market orders are appropriate when getting into or out of a position matters more than the exact price: closing a losing trade, entering after a confirmed signal in a liquid session, or exiting before a scheduled event. When the exact level matters, a limit order is the alternative.

Many platforms let the trader set a maximum deviation on market orders, rejecting fills beyond that distance, which caps slippage at the cost of occasionally not filling at all.

A common mistake

Using market orders to chase a breakout during a news spike. The fill lands near the top of the spike, and the retracement that follows stops the trade out even if the direction was right.

See also: Limit order, Stop order, Slippage, Bid, ask and spread.

Frequently asked questions