What happens to a buy market order if no one is selling?

Discussion in 'Order Execution' started by novicetrader69, Oct 15, 2018.

  1. What happens to a buy market order if no one is selling? Does a market order ever land in the limit order book? Does it get rejected?

    murray t turtle likes this.
  2. Robert Morse

    Robert Morse Sponsor

    Your example only happens during times of system problems. That said, if a stock is trading at 40, and all the market makers widen their quotes and the best limit or is 200, you have a certain period of time to Contest the trade from an obvious Error rule.

    My advise is to never use market orders. Use a limit order through the ask a certain amount to protect yourself.
    murray t turtle, VPhantom and Hooter like this.
  3. d08


    It's my understanding that the order would remain active, if multiple market orders are waiting for the other side, time priority would go into effect.
  4. lylec305


    I'm curious. Why would you place a market order with no ask? That is very dangerous ...
  5. maxinger


    Trading an illiquid market is very scary.
    No point trading it then suffer sleepless nights.
  6. rb7


    Some option exchanges reject a market order when there is no opposite limit on the order book.
  7. patrickrooney

    patrickrooney Sponsor

    Some exchanges, CME for example, don't execute true market orders. A market order at CME is really a market limit. They have a variable "worst price" limit for all market orders so a trader can't sell a price of 1 when LTP was 300. A smart trading platform like the TT platform from Trading Technologies can give you these overrides as well so you have smarter / tighter control than you may have with an undefined exchange limit.
    murray t turtle likes this.
  8. bone

    bone ET Sponsor

    Just to echo Patrick's post - I've personally always put tight control limits on my order settings. But hey, if it were a legit situation I'd be the guy to place an offer at ~ 4.5% above the last price print :D
    murray t turtle likes this.
  9. Oh HELL yes.

    You never want to be trying to make a play that is large enough so that you become the market.

    My rule is "no bigger than 0.5% of the average daily handle". Even that's pretty large... your play can be 1/200 of the entire market, world wide.
  10. Thanks for the question...

    #10     Oct 15, 2018