Fill or Kill (FOK) order in trading: what is it and how to use it

When trading on exchanges, it is important to understand the various types of orders that help manage trade execution. One such order is the Fill or Kill (FOK), which is designed for traders dealing with large volumes or using specific trading strategies.

What is a Fill or Kill (FOK) order?

A Fill or Kill (FOK) order is a limit order that must be executed immediately and completely at the specified price or better. If this is not possible, the order is canceled without partial execution.

This type of order is useful when a trader wants to avoid partial execution, which can lead to undesirable price fluctuations or changes in strategy.

Key characteristics of FOK:

The order cannot be partially filled – either the entire volume is filled immediately, or the order is canceled.

Works only as a limit order – cannot be applied as a market order.

Suitable for large trades when a trader wants to achieve precise execution.

Used in arbitrage and algorithmic trading to avoid execution delays.

How does a Fill or Kill order work?

Suppose we have a trader who wants to buy 500 LTC at $131.20 per coin (the price is current at the time of writing). They place a limit order of type FOK.

Scenario 1: The order is executed completely

If there are 500 LTC on the exchange at $131.20 or lower, the order will be executed immediately. For example, if the order book contains:

200 LTC at $131.10

300 LTC at $131.20

Then the entire volume of 500 LTC will be bought instantly, and the order will be executed.

Scenario 2: The order is canceled

If there are only 300 LTC in the order book at $131.20, and the remaining 200 LTC at $131.30, the order will be canceled because it was not possible to fill the entire order at the specified price or better.

Where is the FOK order applied?

1. Trading large volumes

Large investors (whales) and institutional players use FOK to avoid partial execution and receiving a 'smeared' price.

2. Arbitrage trading

Traders engaged in arbitrage often use FOK to ensure the purchase (or sale) of an asset at the desired price on one exchange before executing the trade on another.

3. Scalping and high-frequency trading (HFT)

For short-term strategies, FOK allows avoiding execution delays, which is especially important in scalping.

Advantages and disadvantages of FOK

Pros:

✔ Full control over price and volume.

✔ Avoiding partial execution and associated risks.

✔ Suitable for high-frequency and arbitrage trading.

Cons:

✖ High chance of order cancellation, especially in low-liquidity markets.

✖ May not work in highly volatile conditions.

✖ Not suitable for all strategies — for example, long-term investors rarely use FOK.

A Fill or Kill order is useful for traders who want precise execution of a trade without the risk of partial execution. It is ideal for large volumes, arbitrage, and rapid trading, but may be ineffective in low liquidity conditions.

Before using FOK, it is essential to consider market liquidity and the depth of the order book to avoid frequent cancellations of trades.

P.S. When placing a limit order on Binance, you can select the 'Time in Force' option and set it to 'FOK'. This will ensure either full and immediate execution of the order or its cancellation if the necessary conditions are not met.

Note that using FOK orders is most effective in high liquidity markets where the likelihood of full order execution is higher. In less liquid markets, such orders may often be canceled due to insufficient volume at the desired price.

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