Little Known Commodity Futures Broker Orders

Commodity futures trading has a variety of broker orders no longer in frequent use. These are not taken so much anymore. Several are nearly obsolete because of twenty-four electronic trading.

One type of now little used order to commodity futures brokers is called Immediate Or Cancel (IOC). This is much like a Fill OR Kill (FOK).

The order is sent to the floor broker. If they can fill it, fine. If not, it’s cancelled.

The difference is that with a FOK order, the trader will not accept partial fills. They want either the entire order, or nothing.

With an Immediate Or Cancel order, the trader is willing to accept partial fills. So if they wish to buy ten December corn contracts but the floor broker can get them only five, they’ll take the five.

Both KOC and IOC orders are good for day traders who want to get in fast so they can get out fast, to take of very short term opportunities.

With an IOC order, the trader can take at least part of the position they wish, if not all of it.

There’s also Market On Open (MOO) orders. This is where an order is entered before the market opens, and the floor broker is to fill it within the first three minutes of the market being open.

These orders used to be more common before electronic trading kept orders open 24 hours a day. A trader could study the markets during the evening or weekend, determine their trades and then get their orders in to be filled when the market opened.

However, other traders stayed away from Market On Open orders because the opening of the market is very volatile. Fills could be unpredictable. Thus, there is now a lot of possibility of errors and liability, so many brokers are reluctant to accept them, although some full service brokers still do so.

In commodities with 24 hour trading, you must clarify with the broker exactly what constitutes the open.

The opposite of MOO orders is Market On Close (MOC) orders. Here the order must be closed in the final three minutes or thirty seconds before the market closes for the day.

This is also of less importance because of electronic 24 hour trading. Although, to day traders, it’s even more important they go flat before they shut down for the day, because they could lose a lot of money overnight. However, it’s not necessary for them to get out at a particular time. They can give their brokers the close out orders at any time of the day or night.

Electronic contracts don’t accept MOC orders. The brokers that do accept them do so on a “not held” basis. That means they can’t be held responsible for not being able to execute the order.

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