Time in force is a special instruction that traders can use to specify the way they want their trade orders to be executed and for how long. It can be used to give traders more flexibility and options when entering the cryptocurrency market. This articles will explain three such orders, the GTC IOC FOK, namely Good till Canceled order, Immediate or Cancel order, and Fill or Kill order.
Good till canceled Order
The Good till canceled is the most basic and default Time in Force used by most traders. With it, trade orders fill partially or fully indefinitely until the entire order quantity is filled unless canceled by the trader. There is no time limit, nor filling requirements for it. To note, some exchanges may use a 24h time limit for that order, which should give more than enough time for the most common orders to be filled.
To better explain what this does imagine a trader places a 10,000 contracts order going Long. After a while, 5,000 contracts can be matched. 5,000 of his contracts will be matched and the rest will remain in the order book until they are either matched or canceled by the trader.
Fill or Kill Order
The second type of Time in Force order, the Fill or Kill order, is designed to be filled, at the best price, in its entirety or not at all. Either the entire order is filled at once or the entire order is canceled. This is useful for traders who wish to have their entire order passed and not
Taking back the previous example in which a trader places an order of 10,000 contracts. If only 5,000 contracts can be matched then none goes through and the entire order is canceled. Only if all 10,000 contracts can go through is the order executed.
Immediate or cancel Order
The third type, the Immediate or Cancel order, is designed to be filled, at the best price, immediately with the unfileed portion being canceled. The difference with the other two types lies in the immediacy of the order. This is useful for traders who want to both control the price of the order and not have the risk of having another portion of the order comes through at a later date when it might be less interesting for them.
Taking back the previous example in which a trader places an order of 10,000 contracts. If 5,000 contracts can be immediately filled, then the other 5,000 remaining unfilled contracts will be canceled.
As previously mentioned, Time in Force enables traders to choose how they want their trades to be filled and for how long. This is obviously dependent on the order type as some would be filled immediately.
Looking at two of the most common order types, market orders, and limit orders; market orders are filled immediately at the best available price, meaning that they could not use any such options. Limit orders, on the other hand, are placed in the order book and wait to be matched. As such, they are the prime users of specifications such as gtc ioc fok orders.
This concludes today’s articles about Time in Force, we hope you learned a lot, enjoyed the read, and stay tuned for more great content.