What is a Fill or Kill Order?

Buying and selling on the stock market is one of the ways you can invest in financial securities, and to do that, you need a few tools at your disposal, including a strategy, risk guidelines and capital. Brokers fulfill the trading orders of their clients and profit from the commission. Investors use different types of trading orders to enter the market under specific conditions. One of these is the “fill or kill” order. But how does this type of order work, and where are the best places to trade?

Overview: What is a Fill or Kill Order?

When you place an order for a stock on an exchange through a broker or an electronic trading platform, one of the important specifications is the time-in-force specification, which tells the exchange or the platform the period of time in which the order will be good before it expires and gets canceled.

The fill or kill (FOK) is a specific type of limit market order which tells the broker to execute the order immediately and entirely or not to fulfill it at all (kill it). In other words, the order gives a choice to the market maker to fulfill all contracts immediately at a particular price or kill the order. These orders usually pressure the market makers in their decision-making and in most cases, they get “killed,” not fulfilled.

When you use a standard buy order, you announce your willingness to buy a stock at a particular exchange rate and the broker executes the order when the stock reaches that particular price.

How Fill or Kill Orders Work

Imagine that you want to buy 100,000 shares of a particular stock at $10 per share and you want to do this immediately. You don’t want to buy less or more than 100,000 shares. You don’t want to buy these shares for a price that is lower or higher or higher than $10 per share and you don’t want to execute the order later. You want to execute the transaction at an exact moment. For this reason, you request a fill or kill order from your broker. Your broker has two options:

1. To fill the order (take it and to process the transaction) or
2. Kill it and not fulfill the order.

The idea of the fill or kill order is to make sure that you won’t get a partial fill or an execution on a slightly different price. It either executes the way you want it or doesn’t at all. If the broker fails to fill the entire order, it gets canceled and doesn’t go on the stock market.

The fill or kill order is an advanced trading tool and it comes in handy when you spot a one-time trading opportunity. It’s an aggressive way to tackle the market, as it accepts nothing but the entire implementation of the conditions.

You shouldn’t confuse the fill or kill with other orders like:

• Immediate or cancel (IOC): This is an order that concerns timing. The broker cancels it if it’s not implemented immediately upon arriving on the exchange.
• All or nothing (AON): This is an order that concerns 100% fulfillment. It requires an entire execution or no execution at all.

Actually, the FOK order is a combination of the IOC and the AON orders. If the broker meets the conditions for the IOC and the AON orders together, it also meets the conditions for the fill or kill order.

Best Online Stock Brokers

These are the best online brokerage agencies to trade stocks. Each of these brokers will give you a suitable environment to trade stocks. These are the most competitive brokers on the market with fast order implementation and relatively low rates.

Final Thoughts: Mastering Fill or Kill Orders for Better Trading Outcomes

The fill or kill (FOK) is an advanced trading order. The idea behind this order is to take advantage of a rare trading opportunity on the market where it’s all or nothing.

But the fill or kill is not the only advanced trading order you can use. There are many other orders that you can use to tackle the stock trading market. Some of these are:

• All or none (AON)
• Immediate or cancel (IOC)
• Good for day (GOD)
• Good this month (GTM)
• Good till canceled (GTC)

You may need to research all of these trading orders if you want to invest in stocks. The fill or kill order isn’t a sufficient tool for you to trade efficiently on the stock market, as you need to know how to combine all order types including limit and stop-loss orders to create a less-risky trading environment.

Frequently Asked Questions