What Is IOC Order In The Share Market?

A share market is a place where hundreds of stakeholders trade at a given point of time during market hours. So if you are a trader looking to buy or sell multiple securities throughout the day, it can be unclear to keep track of the stock prices and the buying and selling. To combat this, a trader can place an IOC order, the full form of which is Immediate or Cancel order in the share market. Even when the markets crashed during the Covid-19 crisis, they curtailed activities, but the traders continued their activities. 

When IOC Order Should Be Placed? 

IOC order should be executed immediately. It does not create active positions; it will get executed or cancelled. It is not necessary to intervene to cancel the order as it is an automated process. IOC is a duration order category of orders with a specified duration. For IOC orders, the duration is a few sections. 

Need For IOC Order

It is necessary to understand IOC orders in the share market. There are many ways to get a free trading account, but it is difficult to generate profits without a clear understanding. Once you get an online trading account and place an order, there is no certainty of executing the order. The number of people trying to buy a stock and the number of people trying to sell it might differ. If there is a buy order placed for stock and people are trying to sell it. If you place an order but there is a lack of sellers, you may have to wait to complete the order. This duration may create several active positions, which are often confusing. 

So we need an IOC order to buy and sell stocks multiple times during intraday trading

Flexibility With IOC Order

One can set the IOC order as a market order or limit order. 

• When you place a market order, the shares are bought and sold at current market prices. 

• With a limit order, one can specify the price at which one wants to buy or sell a particular scrip. 

With IOC orders in the share market, one can also avail of the provisions of partial fulfilment of the order. For example, you place an IOC order to buy 100 shares of a company. There are not enough company shares to be sold now, but as an IOC order is executed immediately, you will be allocated 20 shares. In contrast, the order for the balance will be automatic. 

How Does The IOC Order Function? 

IOC order in trading is an order that an investor or a trader can initiate in the share market. This order states that once the order is released in the market, it needs to be executed. The buying or selling of the security needs to happen almost immediately, and if it doesn't, the order stands cancelled, and you no longer have the pending order. This order is automatically cancelled and requires no intervention from the investor. 

An IOC order is a duration order where the investor decides how long the order is active and will remain active in the market. When it comes to an IOC order, it is a zero duration order as there are only a few seconds of time-lapse between the placement of the order and the execution of the order. One can set an IOC order as a limit or market order. A limit order is when the person will sell-buy the security only when it is at a particular price point. A market order trade is executed at a current price point. For instance, if you initiate an IOC order market order to buy 100 shares of a Company; the order is immediately released into the market. The order is cancelled if not completed. 

When Is IOC Order Effective? 

An IOC order is most effective when you have to place a large order, but you do not want to influence the markets. Especially with low volume, it can influence the left open for a long time. The IOC order hasn't been open for a long time, and the partial fulfilment facility makes it a flexible option. So in case, the number of shares sought is not available, the IOC order ensures that the available is assigned to the trader, unlike an all or none order. An IOC order can be built into the online trading account. An IOC order is also a tool for algorithms or programs to trade through your free trading account.  

When Is An IOC Order More Useful? 

The best time to execute the IOC order is when 

• You want to make a large order but not influence the market 

• When there are multiple securities to trade in but lack of time and effort to monitor, each can set an IOC order for specific securities. 

An immediate or cancelled order, if used properly, is an effective tool. One can execute multiple IOC orders without the need to track their status for a long time. However, it is to be used sparingly as many partially fulfilled IOC orders can disturb the calculations. You can know more about an IOC order for easy trading by opening a trading account with Enrichmoney.