In the futures market, the market order, also known as "following the market", refers to the trading order to buy (sell) the futures contract in a specific delivery month immediately (as soon as possible) according to the best price in the market at that time.
In the stock market, the market price means that when a trader entrusts a transaction, he does not need to enter the entrusted price, and the counterparty limit order is the transaction price. The market order takes precedence over the limit order, and only the other party's limit order is processed. The market order of both parties to the transaction does not trade. Market orders are sorted according to the principle of first entering time. The unfinished part of the market order is automatically revoked.
In the stock index futures market, the trading rules of China Financial Futures Exchange stipulate that the market price order refers to the order to trade at the best price that can be executed in the market at that time without ceiling price.
Advantages and disadvantages of market order
Generally, when the market price keeps rising, we will try to buy as soon as possible, and when the market price keeps falling, we will try to sell it at a good price [2].
The advantage of this order is that it can complete the transaction quickly and effectively, because the floor trader has the right to execute the trading order immediately after receiving the order.
The disadvantage of this instruction is that the result of the transaction may not be very satisfactory to customers, because the transaction risk of this instruction is relatively high, especially when the market price fluctuates sharply.
The difference between market order and limit order
A limit order refers to an order that is sold at a limited price or better. The price limit order is valid on the same day, and the unfinished part can be revoked. In other words, the prescriptions are different. The time limit of the market order is very short, that is, it is valid at the time of trading. Once there is no transaction, the unfinished part will be automatically revoked, so as a trader, there is no choice. As a limit order, its effective time limit is the same day, and it will automatically expire the next day. Furthermore, it is up to the trader to decide whether the unfinished part can be revoked.
Matters needing attention in market price guidance
Market order brings convenience to transactions, but it is also a "double-edged sword". If investors are not familiar with the provisions of the market order, it is easy to bring operational risks. Taking the use of market price instructions in stock index futures trading as an example, this paper discusses the matters needing attention:
First, when doing stock index futures, we must use market price instructions carefully to prevent the transaction price from being outrageous. For example, the seller of a stock index futures contract has 6 lots for the first quotation of 3280, 5 lots for the second quotation of 3290, 4 lots for the third quotation of 3300, 3 lots for the fourth quotation of 33 10 and 2 lots for the fifth quotation of 3350. If there are 20 lots to buy the market order, the transaction will be made in turn according to the price and quantity of the seller's pending order, and the transaction will be made at 3350. This is a big risk of taking advantage of market order. When the price fluctuates greatly, the transaction price of market orders may be quite different from the expected price of investors. Therefore, investors must be cautious when doing stock index futures.
Second, use the market order to close the position, please pay attention to check whether there is any open position, because when the daily limit board appears, using the market order to close the position may not be successful. For example, if 3370 is the daily limit price of a contract, and the number of pending orders at a certain time point is 5 lots, then the market order of one 10 lot is closed with it, then 5 lots are closed and the other 5 lots are automatically cancelled.
3. Investors should also note that the maximum order quantity of market orders is 50 lots each time, and the maximum order quantity of limit orders is 65,438+000 lots each time.