Market Orders, Quotes and Fills

Second Officer · SO02: Placing and Managing Orders · About 25 minutes

Safety rule: A market order asks for execution; it does not guarantee the price shown when you clicked.

Your mission today

By the end you can read Bid and Ask, place a demo market order, and compare the requested price with the actual fill.

Before you start

Complete SO02.1 and confirm that your account is a demo. Turn on Bid and Ask display if your terminal allows it. Have the trade history panel visible. Keep every example imaginary until you verify your broker's own prices and contract terms.

1. Every market has two sides of a quote

Think of a currency booth at an airport. It offers one rate when it buys currency from you and another when it sells currency to you. The difference helps pay the business's costs.

In many retail forex platforms, the Bid is the price at which the dealer is prepared to buy from you. The Ask is the price at which the dealer is prepared to sell to you.

A conventional market Buy opens near Ask. A conventional market Sell opens near Bid. To close a long, you sell near Bid. To close a short, you buy near Ask.

The spread is Ask minus Bid. It can change. The candle on your chart may show Bid, last price or another feed, depending on the product and platform. Do not assume the candle close equals your executable price.

2. Worked example: why a new trade can begin negative

Imagine a demo EURUSD quote:

• Bid: 1.0840
• Ask: 1.0842
• Spread: 0.0002, or 2 conventional pips
• Imaginary position size: $1 per pip

You buy at Ask 1.0842. If you close immediately at unchanged Bid 1.0840, your gross price movement is −2 pips.

That is a $2 price loss (−$2) before commission. No market prediction was needed. The difference came from the quote sides.

Now imagine you buy at 1.0842 and a later Bid quote rises to 1.0852. Closing at that Bid gives +10 pips, or +$10 before separate fees. The market had to rise enough to overcome the initial difference.

If actual entry and exit prices already include Ask and Bid, that spread cost is inside the price result. Do not subtract a second spread fee from the same pair of fills.

Original Black Box Journey teaching illustration. Synthetic example; not historical market data.

3. Submitted, filled and rejected are different states

A market order requests execution at an available price under the account's rules. The platform may fill it immediately, fill only part of the volume, reject it or return an error.

A fill is the price and quantity that actually traded. The requested price is what you asked for or saw while preparing the order. They need not match.

Suppose your intended Buy was 1.0842 but the actual fill was 1.0844. That is an extra 2 pips of adverse entry movement. If unchanged Bid remained 1.0840, an immediate exit would have a 4-pip price loss, not 2 pips.

This difference is often described as slippage. It can be better or worse, depending on the order and market. The correct student habit is to record the request and the confirmation separately.

4. A short trade reverses the price sides

A short position starts by selling. Imagine the same 1.0840 Bid and 1.0842 Ask.

You sell at Bid 1.0840. To close instantly, you buy at Ask 1.0842. You lose 2 pips before fees.

If a later Ask falls to 1.0830, covering the short gives a 10-pip favourable movement from your entry. At the same imaginary $1-per-pip size, that would be +$10 before separate costs.

Do not confuse a lower candle close with a guaranteed profit on a short. The relevant Ask must be available when you close, and execution may differ from the latest quote.

5. Reconcile a demo order like an investigator

For each completed demo trade, save:

1. Exact symbol and account type.
2. Requested direction and volume.
3. Bid and Ask shown near order entry.
4. Requested price or order settings.
5. Actual fill time and execution price.
6. Exit fill, commission and any financing.
7. Final cash result and any difference from your plan.

Use the server history record as evidence. A green notification is not a trade ledger. A profitable fill is not proof that your process was correct.

Common mistake

A beginner uses the chart close as both the entry and exit price. That can hide spread and slippage. Fix it by recording the actual executable side and comparing it with the completed deal history.

Plain-English glossary

• Bid: The quoted sell-to-dealer price in a conventional two-sided market.
• Ask: The quoted buy-from-dealer price in that market.
• Spread: The difference between the Ask and Bid.
• Market order: A request to trade at an available price.
• Fill: The price and volume actually executed.
• Slippage: The difference between the intended and executed price.

Try it yourself

Collect ten demo quote snapshots. For each, mark the price side for opening and closing a long and short. Submit permitted demo market orders at safe size, then save requested and filled prices. Record the spread in pips and explain any difference from the trade history. Do not use a live funded account.

What you can now do

• Mark executable quote sides for long and short positions.
• Calculate the opening spread and simple cash movement.
• Reconcile an attempted order with its actual history record.

Next lesson

SO02.3 · Pending Orders Without Confusion. You will learn how orders wait for a specified price before they try to execute.