Market Order

Market orders guarantee execution but not price. You get whatever the market is offering.

In liquid stocks (like Reliance, TCS), the difference between expected and actual price is tiny.

In illiquid stocks (small-caps), market orders can result in a much worse price than expected.

The difference between the price you expect and the price you actually get is called 'slippage'. On NSE, large-cap stocks in the Nifty 50 have such deep order books that slippage is negligible, usually a few paise at most. But for a small-cap stock with thin volumes, slippage on a market order can cost you 0.5-1% or more of your trade value.

Market orders are best suited for situations where speed matters more than price. For example, if a stock you hold announces a major fraud or regulatory action and you want to exit immediately, a market order ensures your shares are sold right away. Waiting for a limit order to fill could cost you more as the price keeps dropping.

On Indian exchanges, there is an important nuance: market orders for stocks in the Trade-to-Trade (T2T) segment on BSE and NSE are not allowed. These are typically stocks under surveillance or with very low liquidity. For these stocks, you must use limit orders. Your broker app will show an error if you try placing a market order on a T2T stock.

For beginners in the Indian market, a good practice is to use limit orders by default and reserve market orders only for highly liquid stocks or urgent situations. Most brokers like Zerodha charge the same brokerage regardless of order type, so there is no cost difference. The only difference is how much control you have over the execution price.