immediate-or-cancel-order

What is IOC in the Share Market?

What is IOC in the Share Market?

IOC stands for Immediate or Cancel Order is one of the different types of orders that every investor can begin in the share market. It states that when the order is released into the market, it needs to be completed.
That means the order of buying and selling securities needs to be conducted instantly, and if it doesn’t, the order an investor has placed will be cancelled immediately.
The order is canceled automatically, and there is a need for interruption from the investor. IOC is a duration order in which investors can decide how long their stocks will remain active in the stock market.
IOC is also referred to as “zero duration order” because an investor has few seconds of time between the order placement and its execution.
The investor has the right to set IOC as a “market order” or “limit order.” Market order means an investor will execute their trade based on the current price point in the share market.
A limit order means an investor will buy or sell the securities only where the trade is fixed at a specific price point in the share market.
For Example:
An investor has set an IOC market order to buy 1000 shares of ABC company, and the order is instantly released in the share market.
If an investor has failed to complete the order, it will be canceled. Hence, in case of partial fulfillment, if an investor has bought 20 shares and failed to purchase other 80 shares, those remaining 80 shares will be canceled immediately.

An investor can use an IOC order at that time when they are looking to make a large order and don’t want to attract the market by being “active” in the market for a long time.
However, IOC is flexible and allows the investors to get the best profit they can grab from the market. If an investor is looking to issue an IOC, they can quickly issue their online trading platform.
They can quickly build their Immediate or Cancel Order or IOC into their programs to make their trade an effective one.
Investors can set an IOC order for certain types of securities when they have several securities to trade but don’t have much time to put time and effort into each security.

A day order means an order if it’s not completed at the start of a trading day; it will expire at the end of the trading day. However, a day order can also be a limit order, but it will get expired when the trading day ends in the share market.

The significant difference between IOC order and day order is the execution part when making an order.
In an IOC order: If an investor place an order and the order is not completed instantly, the order will be canceled automatically within few seconds.
In a day order: If an investor placed an order and the order is not completed instantly, the order stays active in the pending orders and gets canceled automatically at the end of the trading day.

An IOC order should be used only when:

  • Investor place several orders but unable to monitor each trade at a single time
  • To reduce the risk of forgetting to cancel an order when the trading hours end
  • The investor wants to place an order but without controlling the prices
  • What does IOC means?
  • IOC means the order of buying and selling securities needs to be conducted instantly, and if it doesn’t, the order an investor has placed will be cancelled immediately.

  • When should an investor use an immediate or cancel order?
  • An IOC order should be used only when:
    1) Investor place several orders but unable to monitor each trade at a single time
    2) To reduce the risk of forgetting to cancel an order when the trading hours end
    3) The investor wants to place an order but without controlling the prices

  • What is a day order?
  • A day order means an order if it’s not completed at the start of a trading day; it will expire at the end of the trading day. However, a day order can also be a limit order, but it will get expired when the trading day ends in the share market.

  • When to use an IOC order?
  • An investor can use an IOC order at that time when they are looking to make a large order and don’t want to attract the market by being “active” in the market for a long time.

  • What’s the major difference between IOC Order and day order?
  • The significant difference between IOC order and day order is the execution part when making an order.

Final Thoughts

An Immediate or Cancel order can turn out to be an effective one if an investor applies it correctly. An investor can use multiple IOC orders simultaneously without putting any effort into tracking their status for an extended period.
However, IOC must be used carefully because there might be a chance where multiple IOC orders can affect the investor’s calculations.
To start using IOC orders, and investors can open a Demat and trading account. Opening a Demat or trading account with Nirmal Bang will help you make all investments in one platform.