Market orders are one of four different order types available using Wealthsimple's self-directed trading accounts. Other order types include —
How do market orders work?
A market order allows you to buy or sell a security or cryptocurrency immediately at the best available price at the time of submission. A market order is the default order type in Wealthsimple's self-directed trading accounts.
- Market buy: You place a buy order on the market, and your order gets filled as soon as possible and at the lowest available price at the time that you submit your order. A market buy will not fill if the price of the security is greater than the 5% collar.
- Market sell: You place a sell order on the market, and your order gets filled as soon as possible at the highest available price at the time that you submit your order.
What to expect
- If the market is closed at the time you submit your order, the order will execute when the market opens.
- In fast-moving markets, market sell orders can execute at a significantly lower price than expected. We suggest using a limit sell with a set price if you do not wish to sell your security below a certain amount.
- Market orders on securities expire at market close if they cannot fill within the day, and cannot be extended. If you are unsure exactly why your market order was cancelled, you can try troubleshooting your cancelled order.
- Market orders on cryptocurrencies expire 24 hours after being placed if they cannot be filled and cannot be extended.
Understanding the 5% collar
When you place a market buy order with Wealthsimple, there is a 5% collar added to ensure that you aren’t paying more for your order than you intend. This makes your market buy a limit buy with a 5% collar.
This means that if the security that you intend to buy is trading for 5% greater than the price at the time you submitted the order, the order will not fill. Instead, it will wait for the price of the stock to drop and then fill.
When might the 5% collar prevent my order from going through?
- If you submit a market buy during a trade halt, and the price of the security changes significantly
- If you submit a market buy outside of market hours, and the price of the security changes significantly
- If you submit a market buy when markets are volatile, your order is less likely to go through due to the 5% collar. You might consider using a limit buy with a set price when markets are volatile.
Say you want to purchase stock XYZ, but you are looking to place your order after markets have already closed
- In the Wealthsimple app, you see that the price of XYZ is $100
- The next morning, the price of XYZ opens at $112
- As this is 12% higher than the amount at which you placed your buy order, your order will not fill at this price
- Instead, the price of XYZ must reach $105 or less for your order to fill