Should I use MOC or LOC?

J

jayr95241

I am trading a stock with very low volume and want to place a closing order to avoid the spread. I am reading Limit on Close "Orders can be partially or fully filled depending on exchange terms and market liquidity."


My understanding is that a LOC will not guarantee me a fill even if the close is above the limit price.
Is this also true for market on close orders or will a MOC order guarantee me a full fill?

Thank you.
 
Gaslight Capital said:
LOC no guarantee of fill unless your order can be filled at your limit or better.

MOC: UROUT, guaranteed
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Lets say, XYZ closes at $10.00 Is is possible XYZ BUY MOC closes at $10.00 but LOC BUY order with $11.00 limit does not get filled?
 
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jayr95241 said:
I am trading a stock with very low volume and want to place a closing order to avoid the spread. I am reading Limit on Close "Orders can be partially or fully filled depending on exchange terms and market liquidity."


My understanding is that a LOC will not guarantee me a fill even if the close is above the limit price.
Is this also true for market on close orders or will a MOC order guarantee me a full fill?

Thank you.
More...

Depends on how much you want to get in on or close the position at market end. Market ending time is usually a more turbulent time where the price action is lot more hectic so if you use MOC you are going to get slippage but you get a fill pretty much guaranteed unless the stock has EXTREMELY low volume then you might have to wait. LOC, if the stock has REALLY low volume then you are going to wait a while to get a fill.
 
jayr95241 said:
Lets say, XYZ closes at $10.00 Is is possible XYZ BUY MOC closes at $10.00 but LOC BUY order with $11.00 limit does not get filled?
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If you put in a LOC buy order at $11.00 when the NBBO is at $10.00, the LOC should get filled but still not a guaranteed complete fill. Because your price is better than the NBBO, so you should get filled with all the volume at $10.00 and the remaining at $11.00 but if that still falls short of your entire order, because you have specified you won't go higher than $11.00, whatever remains of your order still won't get filled until someone comes along and is willing to sell you the rest for $11.00. Until then, your order with whatever is remaining will just sit there waiting. With a low volume stock, you never know for how long during ATH. With a MOC buy, you are going to get slippage for sure but you will get a pretty much a guaranteed fill. You will get a fill at $10.00 up to the existing volume at that price and then the rest at the next price level and the next and the next depending on the volume at each price level.
 
jayr95241 said:
I am trading a stock with very low volume and want to place a closing order to avoid the spread. I am reading Limit on Close "Orders can be partially or fully filled depending on exchange terms and market liquidity."


My understanding is that a LOC will not guarantee me a fill even if the close is above the limit price.
Is this also true for market on close orders or will a MOC order guarantee me a full fill?

Thank you.
More...

MOC fill is not guaranteed in theory, but in practice it is incredibly reliable. I've traded several hundred MOCs per day for years and never had a single order that didn't fully fill! The only exception is you can't short on a downtick auction when SSR (shortsale restriction) is in effect.

JSOP said:
If you put in a LOC buy order at $11.00 when the NBBO is at $10.00, the LOC should get filled but still not a guaranteed complete fill. Because your price is better than the NBBO, so you should get filled with all the volume at $10.00 and the remaining at $11.00 but if that still falls short of your entire order, because you have specified you won't go higher than $11.00, whatever remains of your order still won't get filled until someone comes along and is willing to sell you the rest for $11.00. Until then, your order with whatever is remaining will just sit there waiting. With a low volume stock, you never know for how long during ATH. With a MOC buy, you are going to get slippage for sure but you will get a pretty much a guaranteed fill. You will get a fill at $10.00 up to the existing volume at that price and then the rest at the next price level and the next and the next depending on the volume at each price level.
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On close orders can't be submitted less than 10 minutes before the close, so the NBBO at order submission time isn't super relevant here.
 
JSOP said:
If you put in a LOC buy order at $11.00 when the NBBO is at $10.00, the LOC should get filled but still not a guaranteed complete fill. Because your price is better than the NBBO, so you should get filled with all the volume at $10.00 and the remaining at $11.00 but if that still falls short of your entire order, because you have specified you won't go higher than $11.00, whatever remains of your order still won't get filled until someone comes along and is willing to sell you the rest for $11.00. Until then, your order with whatever is remaining will just sit there waiting. With a low volume stock, you never know for how long during ATH. With a MOC buy, you are going to get slippage for sure but you will get a pretty much a guaranteed fill. You will get a fill at $10.00 up to the existing volume at that price and then the rest at the next price level and the next and the next depending on the volume at each price level.
More...

cruisecontrol said:
MOC fill is not guaranteed in theory, but in practice it is incredibly reliable. I've traded several hundred MOCs per day for years and never had a single order that didn't fully fill! The only exception is you can't short on a downtick auction when SSR (shortsale restriction) is in effect.


On close orders can't be submitted less than 10 minutes before the close, so the NBBO at order submission time isn't super relevant here.
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What is the advantage of these types of trades? I never understood why people use them.
 
vanzandt said:
What is the advantage of these types of trades? I never understood why people use them.
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To get into a position or close an existing position based on how the instrument closes for the day. I think it's more for people who trade on the daily timeframe.
 
JSOP said:
To get into a position or close an existing position based on how the instrument closes for the day. I think it's more for people who trade on the daily timeframe.
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But why not just do a regular order at 3:59? Do you perhaps get a better entry, or a better cover price? I have to think it would be nuts to not use a limit. Right?
 
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