IOC in Share Market

IOC in Share Market

IOC stands for Immediate or Cancel Order. It is a retention order type that is used to fix the time duration of the order. The time duration for IOC Order is “IMMEDIATE or CANCEL.” So when you place an IOC Order, the order will either execute or get canceled immediately in milliseconds.

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IOC Full Form In Share Market

In the context of the share market, IOC stands for Immediate or Cancel. An IOC order is one where the order, or a portion, is filled as soon as it is placed. If the entire order isn’t fulfilled, the unfilled portion is immediately canceled.

To illustrate, consider an example where a trader places an IOC order to buy 100 shares of Infosys at ₹1500 each. If only 80 shares are available at that price when the order is placed, those 80 shares will be bought, and the order for the remaining 20 shares will be canceled immediately.

Type of IOC Orders

In the stock market, IOC orders can be broadly categorized into two types: limit IOC orders and market IOC orders. Limit IOC orders are executed at a specific price or better, while market IOC orders are executed at the current market price.

  1. Limit IOC Orders: Here, an investor specifies the price at which they want the order to be executed. If the stock hits this price, the order is filled; otherwise, it’s canceled. For example, an investor might place a limit IOC order to buy 50 shares of TCS at ₹2200. If the shares are available at this price, the order is executed; if not, the order is canceled.
  1. Market IOC Orders: In this type, the investor doesn’t specify a price. Instead, the order is executed at the best price currently available in the market. For instance, if an investor places a market IOC order to sell 100 shares of Reliance Industries, the order will be executed at the best price obtainable when the order is placed.

Difference between Day and IOC

The main difference lies in their duration and execution. Day orders are active for the entire trading day, whereas IOC orders are executed instantly or canceled.

ParameterDay OrderIOC Order
DurationActive for the whole trading dayMust be executed immediately
Partial FillingCan be partially filled over the course of the dayCan be partially filled, with unfilled portion canceled instantly
CancellationUnfilled portion expires at market closeUnfilled portion canceled immediately

Consider a day order example where a trader places an order to buy 200 shares of HDFC Bank at a specific price at the start of the day. This order stays active till the end of the trading day, and it may be partially or fully filled as and when shares become available at the specified price.

On the other hand, an investor places an IOC order to buy 200 shares of HDFC Bank at a specific price. If only 100 shares are available at that price when the order is placed, those 100 shares are bought, and the order for the remaining 100 shares is canceled immediately.

Difference between GTC and IOC

The primary difference is that GTC orders remain active until manually canceled, whereas IOC orders are executed immediately or they are canceled.

ParameterGTC OrderIOC Order
ValidityRemains active until canceled by the traderWill be executed immediately or canceled
Partial FillingCan be partially filled over multiple trading sessionsCan be partially filled, with unfilled portion canceled instantly
CancellationManual cancellation by the traderUnfilled portion canceled immediately

For example, suppose a trader places a GTC order to buy 500 shares of Maruti Suzuki at ₹7000 per share. This order remains active across multiple trading sessions until it is fully filled or manually canceled by the trader. In contrast, if the same trader places an IOC order for 500 shares of Maruti Suzuki at ₹7000 per share, and only 300 shares are available at that price when the order is placed, those 300 shares are bought, and the order for the remaining 200 shares is canceled immediately.

When to Place an IOC Order Type?

Immediate or Cancel (IOC) orders are best utilized in specific scenarios where the investor needs immediate execution. They are particularly useful when there is high volatility in the market or when one is aiming to take advantage of quick market movements.

In stock trading, timing is often as critical as price. For example, a trader who identifies a rapid upward movement in the share price of Infosys might decide to purchase the stock quickly before it rises further. In such a case, an IOC order could be the best choice. 

The trader can set the order at the current market price or a slightly higher limit price. If the order is immediately executable, it will be filled, capturing the advantage of the quick market movement. If not, it will be canceled, allowing the trader to reassess the market situation and possibly place a new order.

To understand the topic and get more information, please read the related stock market articles below.

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