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In trading, the Fill Method or Fill Policy determines how orders are executed, and different fill policies ensure that your orders are filled according to specific conditions. The two common fill policies that are frequently discussed in the context of MetaTrader platforms and many brokers are FOK (Fill or Kill) and IMC (Immediate or Cancel). Let’s take a deeper look at both of these fill methods.
1. FOK (Fill or Kill)
FOK stands for Fill or Kill. It is a type of order execution policy that requires an order to be filled immediately at the best available price, or the order is completely canceled. Essentially, if the order cannot be filled at once, the broker will kill the order and not execute any portion of it.
Key Features of FOK:
- Immediate Full Execution: The order will only be executed if it can be completely filled at the specified price or better. If only part of the order can be filled, the entire order will be canceled.
- No Partial Fills: There is no option to execute part of the order. The trader must either receive the entire quantity at once or nothing.
- Used in Fast Markets: FOK orders are used when a trader needs immediate execution at the available price, especially in fast-moving or volatile markets.
When is FOK Used?
- Scalpers or Day Traders: Traders who want to execute fast orders with no delays or partial fills. This method is often used for high-volume trades that require a quick fill.
- Liquidity Concerns: When the market is less liquid, and there’s a risk that only part of the order might be filled, FOK ensures that only fully executable orders go through.
Example:
Let’s say you place an FOK order to buy 10,000 units of EUR/USD at 1.1050. If the order cannot be filled in full at that price (or better), it will be completely canceled. No part of the 10,000 units will be executed.
2. IMC (Immediate or Cancel)
IMC stands for Immediate or Cancel. It is another type of order execution policy, similar to FOK, but with a slight difference. Under the IMC policy, the order will be executed immediately for any portion of the order that can be filled at the current market price. Any remaining unfilled portion will be canceled.
Key Features of IMC:
- Partial Execution Allowed: Unlike FOK, the IMC policy allows for partial fills. If part of the order can be filled immediately, the broker will execute that portion, and the remainder will be canceled.
- Faster Execution: Like FOK, it ensures that the order is either executed immediately or canceled, but the difference is that IMC allows for the order to be partially filled, unlike FOK which requires the full order to be filled or canceled.
- Partial Order Acceptance: IMC is suitable for traders who want immediate execution, but are open to receiving part of the order when the full quantity cannot be filled right away.
When is IMC Used?
- Traders Seeking Quick Execution: IMC is used by traders who need quick fills but are open to accepting partial orders.
- Liquidity and Market Conditions: In markets with varying liquidity, IMC ensures that traders can get a portion of their trade executed, even if the entire order can't be filled immediately.
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