Why do market orders carry execution risks?
Market orders execute at the best available price but may result in unfavourable execution due to:
Price fluctuations – Rapid market movements can lead to unexpected execution prices.
Low liquidity – If an asset has low trading volume, the order may fill across multiple price levels, causing slippage.
Bid-ask spread – A wide gap between buy and sell prices can result in higher-than-expected costs.
To reduce these risks:
Use limit orders to control execution prices.
Avoid market orders during high volatility periods (e.g., market opening/closing, news events).
Check the bid-ask spread before placing an order.
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