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IOC stands for Immediate or Cancel order. It is one of the many types of order that a trader can place in the share market. With IOC, a trader gives instruction to broker that as soon as the order is released in the market, the buying or selling of securities should happen immediately and if it doesn’t happen, the order gets cancelled without any intervention from the investor.
It is a duration order where the investors decide how long the order will remain active in the market. IOC is a zero-duration order since there are only a few seconds of timelapse between the order placement and its execution.
Example:
Mr. A initiates a Market IOC order for 1000 shares of XYZ Ltd. at Rs. 100 each. As soon as the order is entered into the system only 200 shares are available at Rs. 100/-/ in this case, 200 shares will be bought and the market IOC order for the remaining 800 shares will be automatically cancelled.
An IOC should be used for the following reasons:
Any investor can set the IOC order as a market order or a limit order:
An IOC order is most effective when you place a large order but do not want to influence the markets. Especially large orders with low volume stock can influence the price if left open for a long time. The IOC order doesn’t remain open for a long time and the partial fulfilment facility makes it a flexible option.
If used correctly, IOC order can be very efficient. Multiple IOC instructions over time can be executed without the need to keep track of their status for an extended period. To start trading with IOC orders, you can open a Demat and Trading Account.
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