Understanding Immediate or Cancel (IOC) Orders
An Immediate or Cancel (IOC) order is a specialized type of stock market order used primarily by traders and investors who want quick execution without waiting for the entire order to fill. When you place an IOC order, the order is executed immediately—either fully or partially. If the entire order cannot be filled at once, the unfilled portion is canceled instead of remaining active in the market.
How IOC Orders Work
Unlike limit or market orders, IOC orders prioritize speed and partial execution. Here’s what typically happens when you place an IOC order:
- The order searches for a match at your specified price or better (if it’s a limit IOC order) or at current market prices (if it’s a market IOC order).
- Any shares available for immediate execution are bought or sold instantly.
- Any remaining shares that can’t be filled immediately are canceled.
This mechanism helps traders avoid unwanted exposures and uncertainties caused by pending orders.
Examples of IOC Orders
Suppose you want to buy 500 shares of a stock using an IOC limit order at $20 per share:
- If only 300 shares are available at or below $20 at that moment, you immediately purchase those 300 shares.
- The remaining 200 shares of your order are canceled instantly.
This contrasts with a regular limit order that would keep the remaining 200 shares active in the market until filled or canceled manually.
Who Uses IOC Orders?
IOC orders are typically favored by:
- Active traders and day traders: To quickly enter or exit positions without leaving unfilled orders in the market.
- Algorithmic trading systems: Automate execution for optimal prices and speed.
- Institutional investors: When partial fills meet portfolio requirements immediately without delay.
Advantages of IOC Orders
- Speed: Immediate partial or full execution avoids delays.
- Flexible execution: Allows partial fills when full quantity isn’t available.
- Order control: Automatically cancels unfilled shares, reducing risk of unexpected fills.
Disadvantages and Risks
- Partial fills: You may not get your full desired order quantity.
- Missed opportunities: Canceled portions mean you might miss future price improvements.
- Higher trading complexity: May require careful monitoring and strategy adaptation.
Comparison with Other Order Types
- Fill or Kill (FOK) orders: Require full execution immediately or total cancellation—no partial fills allowed. See our Fill or Kill (FOK) Order glossary for details.
- Day Orders: Active only during the trading day until executed or canceled, but do not require immediate execution like IOC orders. Learn more in our Day Order article.
- Good ‘Til Canceled (GTC) orders: Remain active until the order is filled or canceled by the trader, contrasting with the immediate nature of IOC orders. Explore more in our GTC Order page.
How to Place an IOC Order
Most modern brokerage platforms support IOC orders as part of their advanced order options:
- Choose the stock and specify the quantity.
- Select the order type and choose Immediate or Cancel (IOC).
- Set a price limit if placing a limit IOC order.
- Submit the order and monitor execution.
Always check your broker’s specific instructions, as interfaces may vary.
Final Thoughts
An Immediate or Cancel (IOC) order offers investors and traders a powerful tool for fast execution and flexibility with partial fills. While it does not guarantee a full position, it limits exposure to delayed executions or unwanted partial orders lingering in the market. Understanding when and how to use IOC orders can improve your trading efficiency and control.
For further reading, please visit Investopedia’s IOC order page and the U.S. Securities and Exchange Commission (SEC). You can also explore related order types in our glossary such as Limit Order and Market Order.
