Immediate Or Cancel Order (IOC)- Meaning, Example, Pros And Cons

Investing in the share market is a thrilling adventure that offers profit potential at every turn. While there are a variety of trading options available, one tool demands your attention - the Immediate or Cancel Order (IOC). 

In this trading order, you command immediate execution, but if not fulfilled immediately, it disappears. That's interesting, isn't it? Well, let’s explore more about IOC orders here, where split-second decisions can make or break your trading. Here we will cover what is an immediate or cancel order with examples and its pros and cons. 

What Is An Immediate Or Cancel Order In The Share Market?

When you participate in the stock market, you have different types of orders. One of them is IOC, which stands for Immediate or Cancel Order. When you place an IOC order, you want your buy or sell to happen right away.

When you release your order into the market, it needs to be completed immediately. In case it doesn't get completed instantly, it'll be cancelled automatically. Moreover, IOC orders are considered zero duration orders because there's not much time between placing the order and executing it. It's during this time that the market tries to match your order with other buyers or sellers.

In addition, you can set your IOC order as a "market order" or a "limit order." A market order means you'll trade at the current price. Limit orders mean you'll buy or sell the securities only if you can get them at a specific price.

So, when you use an IOC order, remember that it's all about getting your transaction done right away, and if it doesn't, it'll be cancelled automatically.

Immediate or Cancel Order Example

Let's say you, as an investor, decide to place an IOC market order to buy 1000 shares of ABC company. As soon as you release the order into the share market, it becomes active.

Now, if for some reason the market is not able to fulfil the entire order immediately, it will be cancelled. In this case, let's say you were only able to purchase 20 shares out of the 1000 you wanted. The remaining 80 shares that you didn't buy will be cancelled right away. It means you won't be able to purchase those 80 shares anymore.

When To Use An Immediate Or Cancel Order?

You can use an IOC order when you want to make a big order but don't want to attract the market by staying "active" for a long time. Moreover, IOC is flexible and allows you to maximize your profit. You can quickly issue an IOC through your online trading platform.

With IOC, you can quickly make your trades more efficient. Additionally, if you have a lot of securities to trade, but not a lot of time, you can place an IOC order.

Pros Of Immediate Or Cancel Order

Immediate or cancel orders have these pros:

Quick Execution

The IOC orders are designed to be executed quickly, allowing you to take advantage of market opportunities immediately.

Flexibility

You can use IOC orders for buy and sell orders, and you can specify both quantity and price.

Trade Control

With IOC orders, you can specify exactly how you want trades to be executed, giving you more control over trades.

Cons Of Immediate Or Cancel Order

There are a few cons to immediate or cancel orders. Here are they:

Higher Risk

Orders of this type are more risky because they may not be filled entirely and may lead to missed opportunities.

Complex

Trading IOC orders can be more challenging than other types of orders. Thus, you may need to take a more active role in managing them.

Expensive

Brokerages may charge additional fees for IOC orders, making them more expensive.

Conclusion

The Immediate or Cancel Order (IOC) on the stock market lets you demand immediate execution of your buy or sell request. However, if it can't be done immediately, it gets cancelled. You can make trades more efficient, specify quantities more precisely, and specify prices more precisely by using IOC orders.

However, they are more risky since orders may not be filled completely, resulting in lost opportunities. Also, orders with IOCs can be more complex, require active management, and may incur additional fees. If you're curious about what an immediate or cancel order is and want to experience it, consider using the blinkX trading app. The blinkX app combines a user-friendly interface with advanced features so you can place IOC orders efficiently and take advantage of market opportunities in a split second.