Fill-or-kill orders are one of many tools successful traders use. But are they right for you? Knowing which orders best fit your trading strategy is crucial to making safer trades. It’s common for traders to miss entries on plays by simply entering the wrong order. Don’t let that happen to you!
Let's explore the FOK meaning, its use case, and an example of it in use in crypto trading.
FOK Meaning: Fill Or Kill Order
Some exchanges and trading platforms offer a type of order known as “Fill or Kill Order” (FOK). The term refers to the idea that an order must be filled immediately in its entirety or not executed at all. It is closely related to the “All or Nothing” (AON) order type, which refers to an order that must be filled in its entirety or not at all. Unlike, FOK orders, however, AON orders don’t have a specific focus on the immediate point in time.
Use Of Fill Or Kill Orders
Fill or Kill orders are often used when a trader doesn’t want to accept partial delivery of assets. For instance, when they have a time-based demand to fill their orders on distinct and unlinked markets or exchanges. So a FOK order would allow them to create multiple orders and wait for one to be fully executed without taking the risk of receiving partial fills. After one of the orders is filled in its entirety, the trader is able to cancel the remaining ones.
Fill Or Kill Order Example
Trevor decides to immediately place an order, buying 12,000 BTCUSD contracts at an order price of $15,000, and he sets a FOK limit buy order at $15,000.
Scenario 1: There are only 10,000 BTCUSD contracts available at that price. Therefore, John’s FOK order is immediately canceled.
Scenario 2: There are 20,000 BTCUSD contacts available at $15,000. Therefore, John’s FOK order is filled completely.
Along with the other time in force orders, a FOK order gives more flexibility for a trader when placing an order. It takes away the need to set orders manually, as it will be automatically placed if certain stipulations are met.
Closing Thoughts
In this article, we first covered the FOK meaning. Then, we discussed its use case and referenced it in a real-life example. Fill or kill orders are used on the basis of your preference if you do not want to trade beyond a particular price.
In addition, a fill or kill order can be used for testing a market to buy a particular amount of coins at a particular price and immediately. Hope this article has served your purpose to gain a thorough knowledge of a fill or kill order.
