Getting to know all-or-none orders
What is an all-or-none order?
An all-or-none order is when a trader instructs the broker to execute a contingent order as a whole; if the order is not whole and only partial, then there is no execution. In short, the trading transaction proceeds if the broker meets all the conditions set and will not proceed if the order is just partial, hence the all-or-none name. These orders remain active in the market unless executed or either canceled. Traders commonly use this type of order even though the execution is longer than the others, mainly because they are usually in bulk.
More on all-or-none orders
All-or-none orders are contingent orders. And when we say contingent orders, the trader instructs the broker about certain conditions before the order's execution. We are talking about the filling of the order and the length of time the order is active. All-or-none is beneficial for traders because it ensures that the order's fill is full and not only partial.
Some traders would have confusion about all-or-none orders, immediate-or-cancel orders, and fill-or-kill orders. They might sound identical, but they are very different from each other. As we have said, all AON orders only execute when the order is whole and fulfilled and not partial. In immediate-or-cancel orders (IOC), if the order can't happen immediately right now, then the order gets canceled. In fill-or-kill orders (FOK), if the order can't happen immediately and in full, then the order gets canceled. It is a combination of both AON and IOC.
A scenario that will explain all-or-none orders thoroughly
Offel recently resigned, and she received her full and final settlement money after some time. Since she is also a trader, she decided to invest some of her money with J Company. J Company sells products that innovate high-quality, eco-friendly products. She has been following and observing J Company for a while now, and she thought that this is an excellent opportunity for her to buy shares to become one of the boards since she considers herself an eco-warrior.
Offel wants to purchase 20,000 shares, but then she thought that one share's price is too high no matter how much she wants to become one of J Company's boards. One share amounts to $20. Now, she places an all-or-none order for 20,000 shares at $16 per share. She hopes and believes that the price will decline in the future.
After some time, there is good news and bad news. The good news is that the price dropped at her desired price. The bad news is that the available shares are only 15,000. Offel will not want to purchase this because it will defeat the purpose of her all-or-none order.
She decides to wait longer
since all-or-none shares are not subject to time and duration. They will stay
in the marker unless canceled or terminated. Later on, an investor decided to
sell 7,000 of her shares. Now there is more than enough quantity of shares, and
the price even declined to $14. The transaction proceeds with the execution, and Offel got her
desired price and number of shares to become a board.
