Glossary term
Immediate-Or-Cancel Order
An immediate-or-cancel order is an order that must execute immediately in whole or in part, with any unfilled portion canceled.
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What Is an Immediate-Or-Cancel Order?
An immediate-or-cancel order, or IOC order, is an order to buy or sell that must execute immediately in whole or in part. Any portion that cannot be filled right away is canceled.
IOC is a time-in-force instruction. It tells the market how long the order should remain available, not whether the trade is a good price or suitable investment.
Key Takeaways
- An IOC order seeks immediate execution.
- Partial fills are allowed.
- Any unfilled portion is canceled.
- IOC is different from fill-or-kill, which generally requires the entire order to fill immediately or not at all.
- IOC orders can reduce lingering order exposure but may result in incomplete execution.
How an IOC Order Works
Suppose an investor submits an IOC order to buy 1,000 shares at a limit price. If 600 shares are immediately available at or below that limit, those 600 shares can execute and the remaining 400 shares are canceled.
If no shares are immediately available at the limit price, the entire order is canceled. The order does not sit on the book waiting for later liquidity.
IOC Versus Other Order Instructions
Instruction | What happens | Partial fill? |
|---|---|---|
Immediate-or-cancel | Fill immediately as much as possible; cancel the rest | Yes |
Fill-or-kill | Fill the entire order immediately or cancel it | Usually no |
Day order | Remain active for the trading day unless filled or canceled | Yes |
Good-til-canceled | Remain active until filled, canceled, or expired by broker rules | Yes |
When Traders Use IOC
Traders may use IOC orders when they want immediate liquidity without leaving the unfilled portion exposed. This can matter in fast markets, thinly traded securities, or situations where the trader does not want a visible resting order.
IOC can also be useful for testing available liquidity at a specific limit price. The tradeoff is that the investor may receive only a partial fill or no fill at all.
Execution Tradeoffs
IOC instructions are most often discussed by active traders, institutions, and investors using more precise order handling. Long-term investors may encounter the term less often, but it is still useful to understand because time-in-force instructions can change whether an order rests, fills partly, or disappears.
An IOC instruction does not guarantee a favorable price. A marketable IOC order can still execute at available prices that may be worse than expected in a fast or illiquid market. A limit IOC order controls the worst acceptable price, but it may not fill fully.
Investors should understand order type, time in force, liquidity, spreads, and volatility before using IOC instructions.
The Bottom Line
An immediate-or-cancel order tries to execute right away and cancels whatever cannot be filled immediately. It can control order exposure, but it can also leave the investor with a partial fill or no trade.