What is an all-or-none order?
An all-or-none order is a particular order to buy or sell stocks or other securities. It has a specific rule – the order must be filled or not at all.
For example, let’s say you place an all-or-none order to buy 100 company shares for $50 per share. One of two things will happen:
- If enough shares are available at $50 or less, you will buy all 100 at once.
- If there are not enough shares at $50 or less to fill the whole order, you will not buy any shares.
There is no in-between. Your all-or-none order will never be partially filled. It’s all 100 shares or none.
Why use an all-or-none order?
All-or-none orders are valid when you want a certain number of shares but only at a specific price or better. You don’t want to end up with just some of the shares you wanted.
Here are some reasons people use all-or-none orders:
Getting the exact number of shares
If you’re buying shares, you might need precisely 100, not 80 or 90. An all-or-none order ensures you get all 100 or zero, so there’s no risk of losing a weird number of shares.
Maintaining a target price
When you place an all-or-none order, you set the highest price you’re willing to pay. If you can’t get all the shares you want at that price or lower, you don’t get any shares and don’t pay more than you wanted.
Avoiding partial fills
With a regular order, you could end up with some of your shares filled at one price and the rest at a different price. Or the whole order might not be filled out. An all-or-none order prevents these partial fills.
The downside of all-or-none orders
While all-or-none orders have their uses, they also have some drawbacks compared to regular orders.
Harder to fill
Since your all-or-none order has to be filled completely or not at all, it can be harder to find enough shares at the price you want. Regular orders are more accessible to fill because they can be matched with multiple orders.
Can miss trading opportunities
If an all-or-none order can’t be filled, it usually gets canceled. You might miss out on buying or selling, even if you could have gotten some of the shares you wanted with a regular order.
Not available everywhere
Not all brokers or markets allow all-or-none orders. You might be limited to regular orders in some places.
How all-or-none orders work
When you place an all-or-none order, it goes into a particular section of the order book. The order book is an extensive list of all the orders that have been placed for a specific stock.
Matching with other orders
To fill an all-or-none buy order, there must be enough sell orders at your price or lower to cover all the shares you want. There must be enough buy orders at your cost or higher to fill an all-or-none sell order.
If there’s no way to fill your whole order, your all-or-none order just sits in the order book, waiting for a match. It doesn’t get partially filled like a regular order would.
Special handling
Since all-or-none orders must be filled, they’re handled differently than regular orders.
Lower priority
All-or-none orders are usually given lower priority than orders at the same price. Regular orders are more likely to be filled first.
More oversized orders may be more complex to fill.
A big all-or-none order is often more complex than a small one. It’s easier to find 100 shares to fill a small order than 10,000 for a big order.
What happens when an all-or-none order can’t be filled
If an all-or-none order can’t be filled, it just sits on the order book, waiting for a match. But there are a couple of standard options for what happens next.
Fill-or-kill orders
A fill-or-kill order is canceled immediately if it can’t be filled immediately. The order book arrives quickly. Fill-or-kill orders are the most common type of all-or-none order.
Day orders
If your all-or-none order has a time limit, like end-of-day, it will be canceled if it’s not filled by then. It won’t carry over to the next trading day.
After an all-or-none order is filled
Once an all-or-none order is filled, the trade happens like any other. The shares are transferred, and money changes between the buyer and seller.
And that’s the end of the life of an all-or-none order. It either gets filled out or canceled. There’s no partial fill and no leftover shares.
Deciding if all-or-none orders are correct for you
Sometimes, all-or-none orders can be helpful, but they’re not the best choice for every trade. Here are some things to consider.
When to use all-or-none orders
All-or-none orders are most valuable when:
- You absolutely must have a specific number of shares
- You don’t want to pay more than a particular price
- You’re ok with not trading at all if you can’t get exactly what you want
Some specific cases where all-or-none orders can be helpful:
- Buying a round lot (100 shares) to avoid odd lot fees
- Selling shares to raise a particular amount of cash
- Buying shares to gain a confident percentage ownership in a company
When not to use all-or-none orders
There are also plenty of situations where all-or-none orders may not be the best choice:
- When you’re ok with getting a partial fill
- When you want a better chance of at least some of your order being filled
- When you’re trading in a market or stock with lower liquidity, where big orders are complex to fill
In these cases, you might be better off with a regular order or even breaking your order into smaller chunks to increase your chances of getting at least partial fills.
Recap
Just to review, here are the critical points about all-or-none orders:
- All-or-none orders must be filled in their entirety or not at all
- They are often used to get a specific number of shares at a particular price
- All-or-none orders can be more complicated to fill than regular orders
- They are often given lower priority and may miss trading opportunities
- Fill-or-kill is the most common type of all-or-none order