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Control your time on Investing: Time in Force

6 months ago

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#Be_a_Trader!

Greetings from MCS, the derivatives trading platform where traders ALWAYS come first.

This post will cover the Time in Force function which can help traders to diversify their trading strategies.

Time in Force

Time in force is a special instruction used when placing a trade to indicate how long an order will remain active before it is executed. As mentioned in the beginning, these options are especially important for active traders as it can diversify their trading strategies.

Time in Force Types

There are three types of Time in Force orders which are used together with limit orders:

GoodTillCancelled(GTC)

This order remains active indefinitely until either the order is filled or the trader cancels it. Through GTC orders traders who may not constantly watch stock prices can place buy or sell orders at specific prices and keep them for as long as desired. If the market price hits the price of the GTC order, the trade will execute. All orders on MCS are set to GTC by default.

<GTC Example>

David places a GTC order to buy at a price lower than the current trading level or sell at a price higher than the current trading level. If the current price is 8,500 USDT, David may place a GTC buy order at 8,450 USDT. If the market moves to that price level before David cancels the GTC order or it expires, the trade will execute.

ImmediateOrCancel(IOC)

This order must execute all or part immediately and cancels any unfilled portions of the order. Traders typically use IOC orders when submitting a large order to avoid having it filled at an array of prices. IOC can be selected when placing limit orders including conditional limit orders.

<IOC Example>

If David places a buy long limit IOC order of 10,000 contracts at 9,500 USDT while the market depth only contains 7,000 contracts at the ask price of 9,500 USDT, the order will only fill the quantity available (7,000) and cancel the remaining (3,000).

*Ask Price: When a sell order is submitted into the order book, it is placed with many different sell orders. The order with the lowest price is the current ask price.

FillOrKill(FOK)

This order must be filled immediately and completely or not at all. No partial fills are allowed. FOK orders are normally used when several unlinked markets are available for the same asset, in which case the trader will try to get the whole order filled in each market sequentially, without having to manually cancel each order if it is unfilled.

<FOK Example>

If David places a buy long limit FOK order of 10,000 contracts at 9,500 USDT while the market depth only contains 7,000 contracts at the bid price of 9,500 USDT, the order will not fill any contracts and the entire order will be canceled it cannot be filled completely.

In this post, we looked at the three Time in Force options MCS provides.  MCS will develop diligently to become a platform where various trading strategies can be used.

MCS will consider traders at top priority.

   

Traders always come first on MCS.

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Published 6 months ago