When placing large orders in the stock market, you often want them executed all at once rather than piece by piece. Fill or kill orders solve this problem by demanding immediate, complete execution or automatic cancellation. In this guide, we will explain how fill or kill orders work and when they are most useful.
What is a Fill or Kill Order?
A fill or kill (FOK) order is an instruction that must be executed immediately in its entirety or canceled completely. There is no middle ground. Either the entire order fills right now, or it is automatically canceled and nothing happens.
The simple version: A fill or kill order says "Give me everything I asked for right now, or give me nothing at all." If the market cannot fill your entire order immediately, the order is automatically canceled.
How Fill or Kill Orders Work
Here is what happens when you place a FOK order:
- Your order is sent to the exchange with the FOK condition
- The system checks if the entire order can be filled immediately at your specified price
- If yes, the entire order executes instantly
- If no, the entire order is immediately canceled
- The whole process takes a fraction of a second
Fill or Kill Order Example
Example: Successful FOK Order
You want to buy 1,000 shares of Microsoft at $380 per share using a fill or kill order.
- Current market: 2,500 shares available at $380
- You place a FOK buy order for 1,000 shares at $380
- Result: Order fills immediately for all 1,000 shares at $380
Total cost: $380,000 and you own 1,000 shares of Microsoft.
Example: Canceled FOK Order
You want to buy 1,000 shares of a less liquid stock at $50 per share.
- Current market: Only 400 shares available at $50
- You place a FOK buy order for 1,000 shares at $50
- The market cannot fill all 1,000 shares immediately
- Result: Entire order is canceled, you buy nothing
You do not own any shares and no money was spent. You could try again later or use a different order type.
When to Use Fill or Kill Orders
FOK orders are most useful in these situations:
- Large institutional orders: When you need to buy or sell a large quantity all at once
- Price-sensitive strategies: When partial execution would disrupt your trading strategy
- Hedging positions: When you need exact position sizes for proper hedge ratios
- Arbitrage opportunities: When split-second execution of the full order is required
- Options trading: When you need a specific number of contracts for a spread or strategy
Advantages of Fill or Kill Orders
- No partial fills: You either get everything or nothing, making position management simpler
- Speed: Decision is made instantly, no waiting around for fills
- Strategy integrity: Ensures your trading strategy can be executed as planned
- Clean trades: No need to manage multiple small fills over time
- Price certainty: When combined with a limit price, you know exactly what you will pay
Disadvantages and Risks
FOK orders have significant limitations:
- High failure rate: FOK orders often get canceled, especially for large orders or illiquid stocks
- All or nothing risk: You might miss opportunities because you could not get the full amount
- Limited availability: Not all brokers support FOK orders
- Market impact: Large FOK orders can signal your intentions to other market participants
- Timing dependent: Success depends entirely on liquidity at the exact moment you place the order
Important: Fill or kill orders are rarely used by retail traders. They are more common among institutional investors who need to execute large positions without partial fills.
FOK vs IOC: What is the Difference?
Fill or kill and immediate or cancel orders are similar but have one key difference:
- Fill or Kill (FOK): Must fill the ENTIRE order immediately or cancel everything
- Immediate or Cancel (IOC): Fills whatever it can immediately and cancels the rest
Example: FOK vs IOC Comparison
You want to buy 1,000 shares but only 600 are available at your price.
- FOK result: Order canceled, you buy 0 shares
- IOC result: You buy 600 shares, remaining 400 share order canceled
FOK vs All or None (AON): What is the Difference?
Both FOK and AON require complete fills, but timing differs:
- Fill or Kill (FOK): Must fill immediately or cancel
- All or None (AON): Must fill entirely but can wait throughout the day
FOK is about speed and completeness. AON is only about completeness.
Practical Considerations
Before using fill or kill orders, consider these factors:
- Liquidity: Check average daily volume to see if your order size is realistic for FOK
- Spread: Wide bid-ask spreads make FOK orders harder to fill
- Market hours: Liquidity is usually highest at market open and close
- Order size: Smaller FOK orders have higher success rates
Tips for Using Fill or Kill Orders
- Know your liquidity: Only use FOK on stocks with high trading volume
- Be realistic: A 100,000 share FOK order on a stock that trades 50,000 shares daily will fail
- Have a backup plan: Know what you will do if the FOK order is canceled
- Consider alternatives: IOC orders might be more practical for most situations
- Use with limit prices: Always set a limit price to avoid paying more than expected
FOK Orders in Options Trading
Fill or kill orders can be particularly useful for options traders:
- When executing multi-leg strategies that require exact quantities
- For spreads where partial fills would leave you with unbalanced positions
- When options prices are moving quickly and you need immediate execution
However, options often have lower liquidity than stocks, making FOK orders more difficult to fill.
Track All Your Order Types
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Summary
Fill or kill orders are specialized order types that demand immediate, complete execution or automatic cancellation. They are most useful for institutional traders who need to execute large orders without partial fills. For most retail traders, fill or kill orders are rarely necessary, but understanding how they work helps you grasp the full range of order types available in the market.
Want to learn about similar order types? Check out our guide on immediate or cancel orders or learn about all or none orders.