Fill-or-Kill Limit Orders: Immediate Execution and Market Signals
Summary
A fill-or-kill order is described as a limit order that must be executed immediately for the full requested quantity or cancelled entirely. It does not permit a partial execution. The document contrasts this behavior with immediate-or-cancel and all-or-none orders, noting differences in partial fills and whether an order can remain active under day or good-till-cancelled terms.
The examples use a bid below the current market range to illustrate how a fill could suggest that sellers are willing to transact at a low price, while no fill may indicate stronger demand. This interpretation is presented as a way to probe market conditions, alongside using the order to enforce price, size, and immediacy requirements. These examples are illustrative rather than empirical: an execution or lack of execution alone does not establish market strength, and the article does not discuss venue-specific handling or other execution risks.
Key ideas
- A fill-or-kill order requires immediate execution of the full quantity or cancellation.
- The order type prevents partial fills and specifies a limit price and quantity.
- A trader may use an unfilled or filled bid as a limited indication of available supply or demand.
- Fill-or-kill, immediate-or-cancel, and all-or-none orders differ in their treatment of partial fills and order duration.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.