What is a FOK order in stocks?

A FOK order is a stock trading order used when traders want to buy or sell stocks at a specific price, and they want that order executed wholly and immediately. This type of order requires the market maker to fill the full size or quantity of the order immediately; otherwise, it must be cancelled. This type of stock trading order aims to ensure that orders are not partially filled over time but rather get completed all at once. Furthermore, with a FOK order, there is no post-trade partial settlement.

Determine if you want to use a FOK order

When trading stocks online in the UK, traders have a variety of orders to choose from. One option is the FOK order. It’s essential for investors to first determine if this type of order is appropriate for their trading strategies and financial goals. Traders should ascertain if using a FOK order will help them achieve their desired trading outcomes, as they are designed for immediate execution and settlement. Additionally, investors need to be aware that more fees may be involved with a FOK order due to the immediacy of the order being filled.

Place your FOK order

Once you decide that trading with a FOK order suits you, you can place the order. It is typically done through an online trading platform or broker. You’ll need to specify if you’re buying or selling and include your order’s quantity, price, and time window. Additionally, traders must have enough funds in their trading accounts to cover the cost of a FOK order, as this type of order requires immediate settlement in full. Moreover, trading platforms may require additional information and guidelines when trading with a FOK order, so investors need to check their trading platform before placing the order.

Monitor your open FOK orders

When trading with a FOK order, monitoring open orders closely is essential, as they must be filled immediately. The market maker has the right to reject any partial orders which don’t meet the criteria set out by UK regulations and trading rules. As such, investors must monitor the trading platform or app to ensure their orders are filled and that any trading-related fees are up-to-date.

Ensure your order is filled

Once a FOK order has been placed, traders must ensure it gets filled. It means monitoring the trading platform continuously for any changes related to their open orders and keeping track of any trading fees charged by the market makers. If a trader notices that their order is not filled due to partial fillings from multiple traders, they may need to cancel their order and resubmit it with different parameters.

Confirm settlement of your FOK orders

After filling a FOK order, traders must ensure the orders are settled. It means trading platforms should provide evidence, such as trading contracts and records, to confirm the settlement of FOK orders. Furthermore, traders need to check their trading accounts to ensure that all trading costs have been taken care of and that trading profits have been credited. Once trading fees and trading profits have been settled, traders can consider their FOK orders complete.

Understand the risks associated

Although trading with a FOK order may provide immediate trading opportunities, there are also risks associated with this trading strategy. Due to the immediacy of the order being filled, traders can be exposed to higher trading costs and fees they may not have anticipated.

Volatility

The markets can change quickly, and the prices of stocks can rapidly fluctuate, making it difficult to accurately monitor your trading activities. It can lead to losses if traders fail to anticipate market fluctuations and make trading decisions accordingly.

Lack of liquidity

Due to the fast-paced nature of FOK orders, trading platforms or brokers may not always be able to fill these orders in total. It can lead to trading losses if traders enter into a buy order expecting it to be filled but find that it cannot be filled due to a lack of liquidity.

Inaccurate trading signals

Due to the speed at which FOK orders fill, trading signals may not always be accurate or up-to-date. It can lead to trading losses if traders enter into buy and sell orders based on outdated trading information