In the market, millions of trades occur every second, and an aggressive trader may have numerous trades open at once. Keeping track of all the unfilled vacancies might get tiresome. An IOC is a “duration” order, meaning the investor selects the length during which the order will trade.
An IOC order is a “zero duration” order since there is barely any delay between when the order is placed and when it is carried out. One of the many kinds of “orders” that a trader or investor can place on the stock market is an IOC. The instruction specifies that it must be carried out as soon as it is made available to the market.
This means that if we place an order to purchase or sell a security, it must be done almost promptly; otherwise, the order is cancelled, and we no longer have it on our list of pending orders.
Without the investor’s involvement, the order is automatically cancelled. An IOC order can be set as a market or limit order. With a limit order, we can only sell or purchase a security when its price reaches a specific level. With a market order, the trade is carried out at the current price.
For illustration, that we place an IOC market order to purchase 100 shares of the XYZ business. The order is promptly made available to the market. If the order is not fulfilled, it is cancelled. The order for the remaining 90 shares will be cancelled if only 10 shares are purchased in full.
The optimum moment to place an IOC order is when we want to place a sizable purchase without having to be “present” in the market for an extended period. An IOC is flexible and will let us receive the best deal possible from the market because of the conditions for partial fulfilment.
The IOC can be established as a market or limit order by the investor. A market order causes the shares to be bought or sold at the current market price. We can set the price at which you want to purchase or sell a certain share using limit orders. There is also a mechanism for partial order fulfilment in the case of imminent or cancelled orders. Let’s say you issue an IOC to purchase 100 shares of ABC Company.
There are currently insufficient shares of ABC to be sold; but because an IOC order is promptly executed, we will be given 20 shares, and the order for the remaining 80 shares will be automatically cancelled.