What Is a “Market Order” and Why Is It Risky with a Wide Bid-Ask Spread?

A market order is an order to buy or sell immediately at the best available current price. With a wide bid-ask spread, a market order to buy will execute at the high ask price, and a market order to sell will execute at the low bid price.

This forces the trader to immediately lose the value of the wide spread, leading to high transaction costs and poor execution quality.