Market Orders: Futures Order Types

Futures orders are a very important part of your futures trading tools. Using correct orders can make a difference of making money or losing money. You want to make sure you use the right order for the right type of market conditions. So without further ado, let’s get right to it.

The first order we will talk about is called a market order. A market order basically gets you in at whatever the market is either bidding or asking at that current time. Both the bid and the ask may not be a true indicator of the actual marketplace value at that moment, but is simply other futures traders looking to get filled there.

Market orders should only be used when you are sure that you want to enter the market as soon as possible.

Advantages of using a market order:

gets you filled fast in that particular market
easiest order out of them all
easiest to remember

Disadvantage of using a market order:

fast moving markets may result in a not so favorable fill which can cause you money in the long run
sometimes use too commonly by newer traders
lots of slippage happens with this type of order

In short, market orders should only be used if you have a clear cut signal to enter the market at a prior price and you want to get in now. But be cautious as to not use it if the market is moving faster higher/lower as your fill could end up losing you money. Market orders should be used when the market is in a relatively calm state to ensure good fills.

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