The share market is a fast-paced place where there are hundreds of stakeholders trading at any given point of time during market hours. If you are a trader looking to buy or sell multiple securities through the day, it can get very confusing to keep track of the stock prices, and accordingly purchase or sell. To counter this, there you can place an IOC order i.e. Immediate or Cancel order in the share market.
What is IOC in share market?
An IOC is one of the many types of ‘orders’ that an investor or trader can initiate in the share market. The order states that as soon as the order is released into the market, it needs to be executed. This means that the buying or selling of security needs to happen almost immediately, and if it doesn’t, the order is cancelled, and you no longer have it as a pending order. The order is automatically cancelled and requires no intervention from the investor.
An IOC is a ‘duration’ order which means the investor decides how long the order will remain active in the market. When it comes to an IOC, it is a ‘zero duration’ order since there are only a few seconds of timelapse between the placement of the order and its execution.
You can set an IOC order as a limit or market order. A limit order means that you will sell/buy the security only when it is at a particular price point. A market order means that the trade is executed at the current price point.
For example, let’s say you initiate an IOC market order to buy 100 shares of XYZ company. The order is immediately released into the market. The order is cancelled if not completed. In case of partial fulfilment of only 10 shares being bought, the order for the remaining 90 shares will be cancelled.
When is an IOC order most useful?
Now that you know what is meaning of IOC in the share market, you can understand when to use an IOC order.
The best time to issue an IOC order is when you want to make a large order but not influence the market by being “present” in the market for long. The conditions for partial fulfilment mean that an IOC is flexible and will allow you to get the best you can from the market.
You can quickly issue an IOC from your online trading platform. You can build an IOC order into your programs and trade effectively. When you have multiple securities to trade in but lack the time and effort to monitor each, you can set an IOC order for specific securities.
How is an IOC different from a day order?
The difference between an IOC order and a day order is simple. A day order expires at the end of the trading day if unfulfilled; while an IOC is cancelled as soon as the unavailability of the security is known.
You are now equipped with the basic understanding of an IOC order. With this confidence, you can take the next step of issuing trading orders from your online trading account and build your finances.
What is IOC in the share market?
The full form of IOC is Immediate Or Canceled. IOC allows the investors to buy or sell the share as soon as the order is placed in the market. If failed, the order will be removed from the system. As it is a duration order, it gets canceled if it is not executed immediately.
When should an investor use an immediate or cancel an order?
An IOC should be used for the following cases:
- When an investor place several orders but is unable to monitor each trade at a single time.
- IOC helps in reducing the risk of forgetting to cancel an order during the trading hour.
- When an investor wants to place an order without controlling the prices.
What is a day order?
In simple words, a day order is an order that expires if not used before the end of the trading day. Though a day order can also be a limited order but will expire when the trading ends in the share market.
When to use an IPC order?
This kind of order is mainly placed by investors when they are going to make a large order. This is mainly done because they do not want to attract the market by being “active” for a long time.