Foreign exchange, also known as forex or FX trading, is a global decentralized market for exchanging national currencies. When you place forex trades, you use different types of orders to enter and exit the market. One of the most common order types that traders use is the market order.

A market order is an instruction to immediately buy or sell a currency pair at the best available market price. Market orders are used by forex traders to open and close positions without delay. They allow you to enter and exit trades with speed and are especially useful in fast-moving markets.

In this comprehensive guide, we will cover everything you need to know about market orders in forex trading, including:

What is a Market Order?

A market order is the simplest trade order type. With a market order, you instruct your broker to execute a trade immediately at the best available market price. The trade will go through regardless of the current price available.

For instance, if you want to go long EUR/USD, you would place a buy market order. Your broker would then instantly buy EUR/USD on your behalf at the current ASK price.

The key thing to note is that market orders do not guarantee a specific entry or exit price. The order will execute at whatever the market price is at the exact time your broker processes it. The advantage is you gain speed of execution. The downside is you lose price control.

Market orders are therefore recommended when:

  • You need to enter or exit a trade right away in a fast-moving market.
  • You want to lock in profits quickly on an open position.
  • You are not concerned about the price and just want in or out of the market immediately.

Whereas limit orders may not always get filled if the price misses your specified level, market orders have certainty of execution. However, the flip side is you may end up with a worse price in quickly moving markets.

How Market Orders Work in Forex Trading

Market orders allow instant order execution but do not guarantee a particular entry or exit price. Here is a step-by-step example of how a market order works:

  1. You decide to go long on EUR/USD as you expect the exchange rate to rise.
  2. The current market price is 1.1850/1.1855. This means the ASK price to buy is 1.1855.
  3. You place a buy market order for 0.5 lots of EUR/USD.
  4. Your forex broker immediately executes a buy order at the current ASK price of 1.1855.
  5. 0.5 lots of EUR/USD are bought and added to your trading account at 1.1855, the best market price available at the time.

As soon as you place the market order, it is filled at whatever the ASK price is at that exact moment. The process happens almost instantly, so the market may move away by the time your order executes.

You give up control over the entry price in exchange for certainty and speed of getting into the market. The same principle applies when exiting a trade – your market order sells at the current BID price at the time of execution.

Buying and Selling with Market Orders

Let’s look at some examples of entering long and short trades with market orders:

Going Long with a Market Order

If you want to buy a currency pair and go long, you would place a market order to buy at the ASK. For instance, if EUR/USD quotes are 1.1850/1.1855, the ASK is 1.1855. Your long entry order would execute at this price.

  • Current Price: 1.1850/1.1855
  • You place a buy market order.
  • The order is filled at the ASK of 1.1855

Going Short with a Market Order

If you want to sell a currency pair and go short, you place a market order to sell at the BID. For example, if USD/CAD quotes are 1.3345/1.3350, the BID is 1.3345. Your short entry order would execute at 1.3345.

  • Current Price: 1.3345/1.3350
  • You place a sell market order.
  • The order fills at the BID of 1.3345

In both cases, the market orders are filled at the best current price available in the market at the exact time of execution.

Using Market Orders to Close Trades

Market orders are commonly used to close open trades and lock in profits quickly. For example:

  • You are long EUR/USD at 1.1850.
  • The price rises to 1.1900/1.1905.
  • You place a sell market order to close the long trade.
  • The order executes at the BID of 1.1900

By market selling your long position, you exit at the next available price offered by a seller in the market. The order closes out your trade immediately.

With volatile forex pairs, market orders allow you to rapidly exit trades when your profit target is reached before the price potentially reverses. They are an effective tool for capitalizing on short-term price swings.

Advantages of Market Orders

Market orders have some key advantages that make them a useful order type for forex traders:

Certainty of Execution – Market orders are executed almost instantly. This makes them ideal when you need to get into or out of trades quickly in fast markets.

Simplicity – Market orders are straightforward. You get in or out of the market at the next available price – nothing complex about it.

Speed – No other order type matches the speed of a market order. You can open and close positions in an instant.

Catching Volatility – In volatile markets with big price swings, market orders allow you to jump in and out of trades quickly.

Works in Any Market Conditions – Market orders will get filled regardless of whether the market is stagnant or volatile. Other order types may not always execute.

The certainty and speed of execution are the biggest advantages of using market orders in forex trading.

Disadvantages of Market Orders

While market orders have their place, there are some downsides to keep in mind:

Lack of Price Control – You cannot set a specific entry or exit price as the order fills at the next best market price. Adverse price movements can lead to suboptimal fills.

Vulnerable to Slippage – In volatile markets, prices can change rapidly. Your order may execute at a worse price than intended due to unfavorable slippage.

Increased Spread Costs – Paying the spread for each trade can eat into your profits. This cost is magnified with market orders due to lack of price control.

Risk of Partial Fills – If you trade in large sizes, a single market order may get partially filled at different prices. This can increase the average entry or exit price.

Not Ideal for Scalping or Long-Term Trades – The lack of price precision makes market orders unsuitable for scalpers who seek to exploit small price movements. They are also not ideal for longer-term trades held open overnight or longer.

While market orders have their uses, most experienced forex traders use them sparingly due to the disadvantages above. Limit orders are more common among discretionary and algorithmic traders.

Best Practices When Using Market Orders

Here are some tips to use market orders effectively in your forex trading:

  • Use for closing trades – Market orders are best suited for closing out profitable trades at key levels. Avoid using them for new entries where possible.
  • Trade liquid pairs – Execute market orders only on liquid majors or crosses where slippage risk is lower. Avoid illiquid exotic pairs or during low-volume periods.
  • Beware around news events – Volatility increases around high-impact news, raising slippage risk on market orders. Use limits instead or avoid trading near news.
  • Use small sizes for entries – When using market orders to open trades in fast markets, use smaller position sizes to control slippage risk.
  • Have a backup limit order – Where possible, also set a limit order a few pips away to guarantee a better entry or exit price in case the market order slips unfavorably.
  • Check for partial fills – After executing a market order, ensure the full order quantity was filled. If not, re-enter the remainder at suitable price levels.

With proper precautions, market orders can be used effectively along with other order types as part of an overall trading plan.

Market Orders vs Limit Orders

Market and limit orders are the two most popular trade order types used in forex. While both have their own pros and cons, here is a comparison:

Execution Certainty

  • Market Orders – Filled instantly at best available price. High certainty.
  • Limit Orders – Only filled at set price. Lower certainty. May not get executed if price is missed.


  • Market Orders – Extremely fast execution.
  • Limit Orders – Varies depending on price action. Faster in volatile markets.

Ideal Market Conditions

  • Market Orders – Any conditions. Work best in volatile markets.
  • Limit Orders – Ranging or directional markets. Less effective in very volatile conditions.

Price Control

  • Market Orders – None. Trades at market price at time of execution.
  • Limit Orders – Complete control over entry and exit price set by trader.

Ease of Use

  • Market Orders – Simple point and click.
  • Limit Orders – Requires price and order parameters to be set.

Slippage/Spread Cost

  • Market Orders – High slippage risk. Tend to have higher spreads.
  • Limit Orders – No slippage if limit is reached. Lower spread costs.
  • Market Orders – Closing trades quickly. Entering on breaking news.
  • Limit Orders – All entry orders. Closing trades with precision.

In practice, most traders use a combination of both market and limit orders together as part of their overall trading strategy. Each order type has strengths and weaknesses.

Final Thoughts on Market Orders for Forex Trading

Market orders are a straightforward but powerful trade order type that allow you to enter and exit the forex market instantly. Their certainty and speed of execution make them ideal for closing profitable trades before the price reverses.

However, the lack of price control also makes market orders riskier for trade entries, where sudden slippage can lead to suboptimal fills. For new trades, limit orders may provide better price precision. Most experienced traders therefore use market orders sparingly.

When used selectively along with limits, stops, and other tools, market orders can enhance your overall forex trading strategy. Just be sure to manage the increased slippage risk by trading in small sizes, focusing on liquid markets, and using backup limits.

Over time, you will get a feel for when market orders are the best choice for your style of trading. With the right precautions, they provide an effective way to capitalize on short-term opportunities in the fast-moving forex markets.

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