If we assume a situation where all the Limit Orders for a stock have been executed. The Market Price is say $100 for the stock. No further Limit Orders come in, either for Buy or Sell.
However, the following Market Orders come in:
BUY of Quantity 10
SELL of Quantity 20
What would happen in this case if we assume FIFO for Order Matching?
The obvious thing would happen. 10 shares change owner at the price of $100. A partially still open selling order would remain.
Market orders without limits means to buy or sell at the best possible or current price.
However, this is not very realistic. Usually there is a spread between the bid and the ask price and the reason is that market makers are acting in between. They would immediately exploit this situation, for example, by placing appropriately limited orders. Orders without limits are not advisable for stocks with low trading activity. Would you buy or sell stuff without caring for the price?
