IOC orders are different from Fill or Kill orders (FOK) because an IOC order can be partially filled, whereas a FOK order needs to be filled completely or else the order is canceled. An IOC order can help traders limit their risk, improve the speed of a trade’s execution, and in some cases help a trader get a better price for a cryptocurrency by giving them enhanced flexibility.
Traders can strategically use IOC orders when they submit an order to buy a large amount of cryptocurrency to prevent an order from being filled at multiple prices. An IOC order will automatically cancel any part of the trade that is not immediately filled after the trade order has been made.
For example, if a trader places an IOC order to buy 10 Bitcoins at $10,000, but the market’s lowest offer is 10,500 the IOC order will be open. Now throughout the day, the lowest offer from another trader is to sell 2 Bitcoins at $10,000 then the IOC order will execute 2 Bitcoins at $10,000 and cancel the remaining 8 Bitcoin orders. Submitting an IOC order can be useful to traders who buy or sell multiple cryptocurrencies on a given day by minimizing the risk of forgetting to cancel the order manually.
IOC limit orders can be used strategically to help a trader prevent a bad fill in a fast-moving market or markets with low levels of liquidity. Similarly, IOC limit orders can facilitate the complete or partial execution of a positively trending cryptocurrency that has strong market demand.
An IOC order is an example of a duration order. Duration orders allow traders to specify how long they want an order to remain active while also specifying the conditions when they want the order to be canceled. Other duration orders include fill or kill orders, good till canceled (GTC) orders, and all or none (AON) orders.
Imagine a trader places an IOC limit order to buy 10 Bitcoins at $9,900 and Bitcoin is trading at $10,000. Assume that by the afternoon the price of Bitcoin falls and a seller offers 7 Bitcoins at $9,900. The IOC limit order will automatically and immediately fill the 7 Bitcoins at the offer price ($9,900) and cancel the remaining 3 Bitcoins.
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