How do market orders execute?

How Do Market Orders Execute?

A market order prioritises speed over price. It executes against the best available quotes in the order book, so you may not get the Last Traded Price (LTP) you saw when sending the order. In fast or thin markets, this can lead to slippage, partial fills, or fills across multiple price levels.

How does a market order actually fill?

  • Match against the order book: A buy market order lifts the best offer (ask). A sell market order hits the best bid.
  • Walk the book if needed: If your quantity exceeds the top-of-book volume, the remainder fills at the next price levels, potentially at worse prices.
  • Execution price vs LTP: LTP is just the last traded tick. Your fill depends on the current bid/offer and available depth, which may change milliseconds after you place the order.

Why does slippage happen?

  • Price fluctuations: Rapid moves change quotes between click and match.
  • Low liquidity or shallow depth: Your order consumes multiple levels at progressively worse prices.
  • Wide bid-ask spreads: A larger gap between bid and offer means a less favourable starting price.
  • Opening gaps and news: Orders queued before the open or during announcements can execute far from the prior close or your reference price.

Partial fills & multi-price fills

  • Partial fills: Only a portion executes immediately if there is not enough opposite-side quantity; the rest completes as more liquidity appears.
  • Multi-price fills: Large market orders can fill at several price points as they sweep available depth.

Simple example

  • LTP = ₹100, Best Bid = ₹99, Best Offer = ₹101
    • Market buy is likely to fill at ₹101 (or higher if size exceeds that offer).
    • Market sell is likely to fill at ₹99 (or lower if size exceeds that bid).
Use market orders only when speed matters more than price, and switch to limit or marketable-limit orders when you need control over slippage.

What if...

ScenarioOutcome
I place a market order in a volatile stockExecution can be much higher or lower than LTP due to fast-moving quotes.
Liquidity is low, or depth is thinExpect partial fills, multi-price fills, and larger slippage.
The bid-ask spread is wideYour first fill starts from a worse baseline price.
I want strict price controlUse a limit or marketable limit order instead of a pure market order.

Last updated: 07 Nov 2025