What is: Fill or Kill (FOK)

What is Fill or Kill (FOK)?

Fill or Kill (FOK) is a type of order used in trading that instructs a broker to either fill the entire order immediately at the specified price or cancel it. This type of order is typically used by traders who want to ensure that their order is executed quickly and in its entirety.

How does Fill or Kill (FOK) work?

When a trader places a Fill or Kill (FOK) order, they are essentially giving the broker a specific set of instructions. The broker must either fill the entire order at the specified price or cancel it if it cannot be filled immediately. This type of order is often used in fast-moving markets where speed is crucial.

Benefits of Fill or Kill (FOK) orders

One of the main benefits of using Fill or Kill (FOK) orders is that they help traders avoid partial fills. By specifying that the order must be filled in its entirety or not at all, traders can avoid the risk of only partially executing their trade.

Limitations of Fill or Kill (FOK) orders

While Fill or Kill (FOK) orders can be useful in certain situations, they may not be suitable for all trading strategies. Traders should be aware that using FOK orders can limit their flexibility in terms of price execution.

When to use Fill or Kill (FOK) orders

Fill or Kill (FOK) orders are best suited for traders who need to execute their trades quickly and in full. This type of order is often used in high-frequency trading or when trading in volatile markets where speed is essential.

Examples of Fill or Kill (FOK) orders

For example, a trader may use a Fill or Kill (FOK) order when they want to buy or sell a large quantity of a stock at a specific price. By using a FOK order, the trader can ensure that the entire order is executed at the desired price or not at all.

Conclusion

In conclusion, Fill or Kill (FOK) orders are a useful tool for traders who need to execute their trades quickly and in full. By understanding how FOK orders work and when to use them, traders can improve their trading efficiency and reduce the risk of partial fills.