What is IOC in Share Market

What Is an Immediate or Cancel Order (IOC)?

An Immediate Order or Cancellation Order (IOC) is an order to buy or sell a stock or a security that is an effort made to extract all or part of an order and cancels all parts of the order that are unfulfilled. An investor can use several orders and IOC is one imperative order that indicates how long an order remains active in the market and the conditions under which the order can be cancelled.

Other commonly used period order types are All or None (AON), Fill or Kill (FOK), and Good `till Cancelled (GTC). You can manually place an IOC order or you can program it into an automated trading strategy.

Functions:

• Immediate Cancellation (IOC) - The order will be executed immediately, and all unfilled parts will be cancelled.
• IOC orders require only partial execution and are sometimes referred to as limit orders or market orders.
• Investors use IOC orders in volatile markets to compensate for current market prices Investors use IOC orders in volatile markets to compensate for current market prices.

Basics of an IOC Order

Investors can submit "Limit" or "Market" immediate or cancel orders (IOCs) depending on their specific enforcement requirements. IOC limit orders can be quoted at a specific price, but the IOC market orders are placed at the best bid price to sell and the best offer price to buy and the.

IOC orders differ from other runtime orders in that they only require partial execution. GTC orders remain active until they are executed in the market or cancelled by the client, but most brokers cancel between 30 and 90 days. IOC orders help investors achieve price improvements by limiting risk, speeding execution, and increasing flexibility.

IOC Benefits 

1. Understanding IOC regulations requires a basic understanding of the stock market.
2. Opening a free trading account is a great way to get started in the industry, but it's difficult to make money without a solid understanding.
3. With the introduction of online trading accounts, which are very easy and convenient to open, barriers to entry have been lowered. If you open an online trading account and place an order to buy or sell, there is no guarantee that the order will be fulfilled.
4. There may be discrepancies between the number of people trying to buy or sell stock. If you have ordered a purchase and there are not enough sellers, you will have to wait for the order to complete.
5. Wait times can create many active locations, which can be confusing and difficult to monitor.

Investors typically use IOC orders when they:

• Place large orders to avoid running at different prices.  
• Minimize the risk if you are trading multiple stocks during the day, so that you don’t forget to manually cancel your order at the end.
• Automatically cancel the portion of the order that will not be fulfilled immediately. 

What is the Need for an IOC?

In today’s volatile and fragmented equity markets, prices and liquidity fluctuate by the second. Traditional order types, such as limit or day orders, may leave positions exposed to risk if not executed swiftly. This is where IOC orders become indispensable.

The primary need for an IOC order arises from:

Mitigating Slippage: Traders place IOC orders to avoid the adverse price impact that may occur if an order lingers in the market.

Liquidity Capture: When liquidity is transient—appearing and disappearing in milliseconds—IOC helps capture what's available instantly.

Institutional Efficiency: Large trading firms often need to execute sizable orders without disrupting the market price. IOC ensures that whatever portion can be executed is filled instantly, and the rest is automatically cancelled.

Avoiding Order Queuing: IOC helps traders avoid unnecessary queuing at price levels, especially in highly volatile or illiquid counters.

When is an IOC order effective?

1. IOC orders are most effective when you need to place large orders but do not want to impact the market. Bulk orders can affect prices if left open for extended periods, especially for small inventories.
2. The IOC does not stay open for a long time, but the partial fulfilment options make it a more flexible option. Even if the number of stocks you are looking for is not available, the IOC will ensure that all available are assigned to traders rather than all-or-nothing orders.
3. IOC orders can be incorporated into your online trading account.  
4. IOC orders are also a powerful tool if you are trading on a free trading account using algorithms or programs.
5. It helps you trade agile and you don't have to monitor every big order you place.

Type of IOC Orders

• IOC orders can be combined with limit and market orders.
• If you use a limit IOC order, the order will be executed at the specific price you have selected.
• Also, if you use a market IOC order, the order will be executed at the current best price available on the market.

Flexibility with IOC

Contrary to common belief, IOC orders offer a nuanced form of flexibility, albeit with rigid execution rules. The flexibility lies not in time but in volume adaptability.

IOC can be strategically deployed to:

Partially fill an order without waiting for full execution, thus increasing trade throughput.

Avoid stale exposure, especially in automated trading algorithms where each second can shift pricing dynamics.

Trade across multiple exchanges (via smart order routing algorithms), where portions of liquidity are picked up across venues, and the unfilled part is cancelled instantly.

Accommodate market-impact-sensitive strategies, particularly for illiquid stocks or during opening and closing auctions.

Unlike a Good-Till-Cancelled (GTC) or Day order, IOC doesn't hang in the system—it adapts to what’s executable and deletes what’s not, instantly.
 

When to place an IOC Order Type?

1. Quick Buy and Sell
2. Large Quantities
3. Multiple Stocks
4. liquid Stocks

Difference Between Day Order and IOC Order in Trading

Understanding the strategic difference between a Day Order and an IOC Order is essential for advanced traders:

In essence, IOC focuses on execution velocity, whereas Day Orders favour execution persistence.

Example of IOC Order

Let’s assume a trader wants to buy 1,000 shares of ABC Ltd at ₹150 per share.
They place an IOC Buy Order with a limit of ₹150.

The system checks the order book immediately.

Suppose only 300 shares are available at ₹150—these 300 shares will be instantly executed, and the remaining 700 shares are cancelled.
No manual cancellation is needed; the order auto-terminates.

This type of execution is vital during volatile market openings or when there’s limited time to react to price swings.
 

Conclusion

Immediate or cancelled orders can be very effective when used correctly. You can execute multiple IOC orders without tracking the status over time. However, many partially fulfilled IOC orders can interfere with the calculation and should be used with caution.

To start trading IOC orders, you can open a trading account with IIFL Demit. IIFL Demit and Trading Accounts are all-in-one accounts that allow you to make multiple investments on a single platform.

A stock market is a fast-paced place with hundreds of players trading at any time during trading hours. For traders looking to buy or sell multiple stocks during the day, tracking stock prices and buying and selling accordingly can be very confusing. To counter this, IOC orders can be placed there.