Trading Basics: Immediate Or Cancel Order
A popular financial market order type is the Immediate Or Cancel (IOC) order. This order type lets traders make deals rapidly while controlling risk.
Orders that are immediate or canceled?
A trader may make an Immediate Or Cancel order to purchase or sell a financial security with the condition that any part not performed immediately will be canceled. If the full order cannot be completed at the given price, any unfulfilled part will be canceled.
This order type lets traders try to execute deals instantly at the best market price. They may cancel or partly fill the order if it cannot be completed quickly.
It works how?
Let’s say you’re a trader looking to acquire firm shares at a certain price. You acquire 100 business shares at $50 each using an Immediate Or Cancel order. If market circumstances enable the acquisition of all 100 shares for $50 or less, the order will be fulfilled. The remaining 50 shares will be immediately canceled if only 50 can be acquired for $50.
Immediate Or Cancel orders allow traders to join or leave positions rapidly without risking price fluctuations. This order type streamlines trading and removes market monitoring.
Immediate or Cancel Order Benefits
1. Flexibility: IOC orders let traders execute deals quickly at the best price and cancel any unfulfilled part.
2. Risk management: Cancelling unfilled orders helps traders control risk and avoid losses from price fluctuations.
3. Efficiency: If the price is available, Immediate Or Cancel orders are completed quickly, allowing traders to execute transactions faster.
Immediate or Cancel Order Drawbacks
1. Partial execution: IOC commands may cause partial executions. A partly filled order may come from traders not being able to acquire or sell the whole amount.
2. Market volatility: If the market is turbulent, the desired price may not be accessible within the limited IOC order window, leaving the order unfulfilled.
Conclusion
Immediate or cancel orders are popular because they let traders execute deals quickly and manage risk. They allow partial executions and cancel unfulfilled orders, giving traders greater control over their trading tactics.