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What is IOC in the Share Market?

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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.

What is the need for an IOC?

An IOC should be used for the following reasons:

  • To place a large order without manipulating the prices.
  • To place a large order which will possibly get executed in tranches
  • When placing multiple orders and you cannot monitor each trade

What is IOC in trading?

An IOC Order (Immediate or Cancel) is a specific type of order used in the stock market that mandates immediate execution. If the order cannot be filled within a specified timeframe, it is automatically cancelled. This makes it a practical option for traders looking to make swift transactions without waiting for market fluctuations. Due to its short execution window, the IOC Order is often referred to as a ‘zero-duration order’.

In the context of trading, investors can place IOC Orders as either market orders or limit orders. A market order is executed at the current market price, ensuring quick fulfilment but with less control over the price. Conversely, a limit order specifies a desired price at which the order should be filled, providing more control but with the risk that the order may not be executed if the price is not reached.

What Is IOC in the Share Market? It allows traders to act swiftly in a fast-paced environment, ensuring they can capitalise on fleeting opportunities without the burden of lingering orders. This flexibility makes IOC Orders a valuable tool for active traders seeking efficiency in their investment strategies.\

Flexibility with IOC

Any investor can set the IOC order as a market order or a limit order:

  • When an investor places a market order the shares are bought or sold at the prevailing market prices.
  • When an investor places a limit order, they can set a specific price at which they want to buy or sell a particular scrip.

When is an IOC order effective?

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.

When is an IOC Order most useful?

An IOC Order (Immediate or Cancel) is especially advantageous for investors looking to execute large trades quickly without disrupting market stability. By placing the entire order at once, traders can minimise their exposure to price fluctuations, making this order type ideal for volatile markets. It is particularly useful when market conditions are changing rapidly and immediate action is necessary. However, investors should carefully evaluate their trading strategies and time limitations before opting for an IOC Order. Many online trading platforms offer intuitive features for creating and managing these orders, simplifying the process and enhancing execution efficiency. Why should investors understand what Is IOC in the Share Market? The reason is it enables them to leverage this tool effectively.

Conclusion

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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Frequently Asked Questions

What Is IOC in the Share Market?

Answer Field

An IOC (Immediate or Cancel) order is a trade instruction that requires immediate execution. If the order cannot be filled promptly, it is automatically cancelled, making it ideal for quick transactions.

When should an investor use an immediate or cancel order?

Answer Field

Investors should use an IOC Order when they need to execute trades swiftly, particularly in volatile markets. This order type is beneficial for large transactions where price stability is a concern.

What is a day order?

Answer Field

A day order is a type of order that remains active only for the trading day it is placed. If it is not executed by the market close, it is automatically cancelled.

When to use an IPC order?

Answer Field

An IPC (Immediate or Persist) order should be used when an investor wants to fill a portion of the order immediately while keeping the remaining quantity open for future execution.

What is an example of an IOC order?

Answer Field

An example of an IOC Order could be an investor wanting to buy 1,000 shares of a stock at £10. If 700 shares are filled immediately and 300 remain unfilled, those 300 will be cancelled.

What is the order limit?

Answer Field
An order limit refers to the maximum or minimum price at which an investor is willing to buy or sell a security. It ensures that trades are executed only at desired price levels.

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