What is IOC in Share Market? & How to Place an IOC Order? | Espresso

IOC in Share Market – All You Need to Know

If you’re a regular stock market investor, you know how busy these markets can be during their working hours. With millions of traders trying to execute their orders every second, things can get too complicated at times. Hence, you might have to stand in long virtual queues to ensure the execution of your orders.

Published on 14 June 2022

Keeping in mind the volatile nature of the stock market, any delay in execution can impact your trading prices and strategies. Also, if you’re trying to execute multiple orders within a short time frame, it can get difficult for you to keep track of all of them.

To avoid such a situation, you can place an IOC order or an Immediate or Cancel Order in the share market. IOC share market orders are very useful for traders who like to execute bulk orders without impacting the share prices. Continue reading to know what is IOC in the share market and how it can help you out.

What is IOC in the Share Market?

As an investor, you can initiate several types of trades or orders in the stock markets, and IOC is one such order. An IOC order stands for Immediate or Cancel order. As the name suggests, an IOC order is either executed immediately on the exchange or gets cancelled. No further action is required from the investor.

Sometimes, when you place trade orders on the stock markets, your order may not get executed immediately because of the long queues. But, as per the rule, stock market orders get executed on a first-come-first-serve basis. So, in case there are a few people who have placed the same order as yours, but before you, their order will get executed first.

In such cases, your order will be shown as a ‘pending order’, and it will get executed only if there are enough buyers or sellers in the market. Sometimes there can be a mismatch between the number of buyers and sellers in the market. However, an IOC share market order ensures that your order gets executed immediately in the market, and in case it fails to get executed, it cancels out automatically.

For example, suppose you placed an IOC order for 100 shares of a company, but 100 shares are not available in the market at that moment. In such a case, your order will get cancelled automatically.

How to Place an IOC Order?

To place an IOC order on the share market, you need to select the “IOC” option on the online trading platform of your stockbroker while placing your order. As an investor, you can place the IOC share market orders as market orders or limit orders. You need to place a market order if you want to buy securities at the prevailing market price. Otherwise, you can place a limit order to buy securities at a specified price.

Also, you can select the duration for which you want your IOC order to remain active in the market. In the case of a zero-duration IOC order, the order gets executed immediately or gets cancelled out. However, if you place an IOC order with a five-minute duration, your order will remain active in the market for five minutes before cancelling out.

What is the Use of the IOC Order?

Now that you have understood what is IOC in the share market, let’s discuss when and how you can use the IOC order. You can use an IOC order if you want to place a bulk order in the market but don’t want to influence the prices by being active in the market for long.

Sometimes, when you place bulk orders in the market, and some of your orders don’t get executed, you can forget to cancel them. And such orders get executed when the price of the share rise or falls again at your level. As an investor, you can incur losses due to this. You can place an IOC order to jump in and jump out of the market without standing in virtual queues.

Another advantage of IOC orders is that they allow partial execution of orders, unlike All or None (AON) orders. This means that IOC provides you with greater flexibility and allows you to get the best out of the market.

What is the Difference Between an IOC Order and a Day Order?

The main difference between an IOC order and a day order is in terms of execution. A day order expires after the end of a trading day if it doesn’t get executed in the market. On the other hand, an IOC order is either executed immediately or cancels out automatically.

In case a day order doesn’t execute immediately in the market, it remains active the entire trading day until it gets over.

Conclusion

An Immediate or Cancel (IOC) order can be very helpful if used properly. When you need to place multiple orders at the market, you can try IOC orders. This ensures your orders either get executed immediately or cancel out. You also have the flexibility to choose the duration of your IOC orders and decide if you want to place market orders or limit orders.

Chandresh Khona
Team Espresso

We care that you succeed

Bringing readers the latest happenings from the world of Trading and Investments specifically and Finance in general.