Benefits of IOC (An Immediate or Cancel Order) in the Share Market


The stock market is a fast-paced environment with thousands of participants trading at any given time during market hours. It can be difficult to keep track of stock prices and buy or sell several securities during the day if you are an investor trying to buy or sell several securities. To counteract this, you can put an IOC order in the stock market, which stands for Immediate or Cancel order.

What Does IOC In The Share Market Refer To?

An IOC is one of the many forms of ‘orders’ that a stock market investor or trader can place. The order specifies that it must be executed as soon as it is published into the market. This ensures that you must purchase or sell a security almost immediately, or the order will be cancelled and you will no longer have it as a pending order. The order is immediately cancelled, and the investor is not required to take any action.

An IOC is a ‘period’ order, meaning the investor chooses how long the order will be available in the market. When it comes to an IOC in the share market, it is a ‘zero duration’ order because the time between placing the order and its execution is just a few seconds.

An IOC order in the stock market may be set as a cap or market order. A limit order specifies that you can sell or purchase a security only when it reaches a certain price. The transaction is conducted at the current price point when you place a market order.

Let’s say you place an IOC market order to purchase 100 shares of XYZ business. The order is placed in the market right away. If the order is not completed, it is cancelled. In the event that only 10 shares are purchased, the order for the remaining 90 shares will be cancelled.

IOC Benefits And Its Importance

To comprehend the IOC order, a basic understanding of the stock market is needed. Opening a free trading account is a good way to get started in the industry, but it’s difficult to make money without a solid understanding. With the introduction of online trading accounts, which are extremely simple and convenient to open, the entry barrier has been lowered. When you open an online trading account and put a buy or sell order, there is no guarantee that the order will be filled. There may be a mismatch between the number of people trying to buy and sell a stock. If you put a buy order but there aren’t enough sellers, you can have to wait for the order to be completed. The waiting time results in a large number of active positions, which can be confusing and difficult to monitor at times.

Gain More Flexibility With IOC in the Share Market

The IOC can be configured as a market or limit order. The shares are purchased or sold at the current market rates when you place a market order. You may use limit orders to decide the price at which you want to buy or sell a specific stock.

There is also a provision for partial fulfilment of orders in the case of immediate or cancel orders. Assume you put an IOC order to purchase 100 shares of ABC. There are currently insufficient shares of ABC to sell, but since an IOC order in the stock market is initiated quickly, you will be allocated 20 shares, while the order for the remaining 80 shares will be automatically cancelled.

When Is An IOC Order In The Stock Market Effective?

When you need to position a big order but don’t want to manipulate the markets, an IOC order is the potentially better option. If a large order is left open for a long time, it can influence the price, particularly in low volume stocks. The IOC is not open for long periods of time. Unlike an all or none order, an IOC guarantees that whatever is available is allocated to the trader. An IOC order may be added to a trading account online. If you trade with your free trading account using algorithms or programmes, an IOC order in the share market is also a useful tool. It allows you to trade more quickly and eliminates the need to track each large order you put.

What Distinguishes An IOC From A Day Order?

The distinction between an IOC order and a day order is straightforward. If unfulfilled, a day order cancels at the completion of the trading day, while an IOC in the share market is ended when the security’s unavailability is discovered.

Real-Time Implementation Of The IOC Order In The Share Market

Let’s pretend you want to buy 100,000 shares of XYZ for the sake of convenience. You estimate that for a difference of Rs.1, you can get the whole quantity. In this case, an IOC order will be the better option because you can get in and out of the market quickly.

Last but not least, a word of warning! If you keep putting IOC orders that only partially or never execute, your order/trade ratio will rise. SEBI keeps a close eye on this in order to keep track of market uncertainty. To the degree practicable, use IOC orders sparingly.

Wrapping Up

If used correctly, an Immediate or Cancel (IOC) order can be extremely efficient. Multiple IOC instructions may be executed without the need to keep track of their status for an extended period of time. It should, however, be used sparingly because a large number of partially completed IOC orders will throw your calculations off. You can open a demat and trading account to begin trading with IOC orders. You may make several investments through a single platform with the demat and trading account, which is an all-in-one account.