An Immediate-Or-Cancel (IOC) is an order to buy or sell a security that must be executed immediately. It dictates that any portion of the order not filled immediately will be canceled.
Understanding IOC Orders
In IOC orders, partial fulfillments are possible if the complete orders aren’t immediately accessible for buying. However, IOC order portions that can’t be filled instantly are canceled, negating the requirement for human cancellation. IOC orders can often be placed using automated trading algorithms or manually on most online brokers.
These orders differ from fill or kill (FOK), and all or none (AON) orders in that they allow for partial fulfillment. However, these concepts may be used synonymously sometimes.
Based on the investor’s execution requirements, they can submit a “market” or “limit” immediate or cancel order. In contrast to IOC market orders, which trade using best bid prices when selling and best offer prices when purchasing, IOC limit orders are entered at specific prices.
IOC orders are distinct from other types as just a partial fill is necessary. On the other hand, AON and FOK orders must be completely filled. Even though the majority of online trading platforms cancel GTC orders in a duration of 30-90 days after they are placed, they stay active until clients cancel or the market executes them.
The Best Way to Use IOC Orders
If large orders are placed, investors frequently employ IOC orders, so they are not filled at various prices. All parts of IOC orders that don't fill right away are automatically canceled.
If an investor, for instance, placed an IOC order to buy 2,000 IBM shares, all non-purchased portions of the 2,000 shares will be canceled. Thus, IOC orders help traders who trade multiple stocks daily reduce the likelihood that they will forget to cancel orders before they are closed. Plus, with more flexibility, IOC orders assist investors in reducing risk and improving prices.