Time in force: GTC, IOC and FOK in plain English

Time in force is the instruction that tells the matching engine how long your order may wait around unfilled. GTC says wait indefinitely, IOC says take what is there this instant and bin the rest, FOK says fill all of it this instant or none of it.

Everything else about these three is a consequence of that one choice. Price, size and side are separate fields. Time in force only answers the question of patience.

Why an order needs a lifetime at all

An exchange or broker matches your order against the opposite side of the book. Sometimes the opposite side is there in full. Sometimes it is there in part. Sometimes it is not there at all, because your limit price is better than anything currently on offer.

The venue has to do something in that third case, and there are only two sane options: keep your order and wait, or hand it back. A resting order is useful. It sits visible on the book, it may fill later when someone arrives willing to trade at your price, and because it is providing liquidity rather than consuming it, most fee schedules treat it kindly.

A resting order is also a liability. It is a standing commitment to trade at a price you chose earlier, under conditions you were looking at earlier. The book moves. Your reasoning goes stale. The order does not notice.

So the venue cannot pick for you. It gives you a field and lets you declare how much waiting you want. That field is time in force.

What each instruction actually does

GTC, good until cancelled, is the default for anyone placing a limit order away from the current price. You want the fill at your number and you are willing to wait for it. It can fill in pieces over minutes or days as counterparties turn up.

IOC, immediate or cancel, is for when you want to interact with the liquidity that exists right now and have no interest in queueing. You get whatever is available at your limit or better, and the remainder vanishes. A partial fill is a perfectly normal outcome.

FOK, fill or kill, is the strict version. The full quantity must be available at your limit in one go. If it is not, you get nothing: no partial fill, no resting order, just a rejection.

What this does to your fill, with made-up numbers

Suppose, and these figures are invented for the example, you want to buy 10 units of something and the ask side of the book looks like this: 3 units offered at 100, 4 units at 101, and 20 units at 105. You set a limit of 101.

As GTC: you fill 3 at 100 and 4 at 101, which is 7 units. The remaining 3 units rest on the book as a bid at 101 and wait. Average price so far is (3 × 100 + 4 × 101) ÷ 7 = 704 ÷ 7, about 100.57. You now have a 7 unit position and a live order you must remember exists.

As IOC: the same 7 units fill at the same average of roughly 100.57, and the remaining 3 units are cancelled on the spot. No resting order, no further exposure, a position that is 70% of what you asked for.

As FOK: nothing happens. Only 7 units are available at 101 or better, you demanded 10, so the order is killed in full. You are flat and you know immediately that the book was too thin for your size at that price.

Same book, same limit, three completely different outcomes. Note also what happened on the fee side. In the GTC case, the 3 units that end up resting could later fill on the cheaper maker side of a fee schedule. If a venue charged, say, an invented 0.1% to take and 0.02% to make, those 3 units would be billed at the lower rate when they eventually fill. The IOC and FOK versions never get that option, because an order that cannot rest is always a taker.

The mistake people actually make

The common error is not misunderstanding the definitions. It is choosing FOK as a general safety setting because “all or nothing” sounds disciplined, and then being confused by a stream of rejections in a thin book.

FOK is not safer than IOC. It is pickier, and pickiness in a thin market means you simply do not trade. If your size is large relative to the depth sitting at your price, FOK will reject you almost every time, and each rejection costs you the chance to get the part of the position that was genuinely available. FOK earns its place only when a partial position is actively harmful: one leg of a pair, a hedge that only works at full size, or a position whose risk arithmetic breaks if you get half of it. If you would happily take 7 of 10 units, you wanted IOC.

The second mistake runs the other way. People place GTC limit orders far from the current price, forget them, and get filled days later in a market they are no longer watching. A GTC order does not expire when your thesis does. It sits there, patient and indifferent, and it is just as happy to fill you into a move you would never have chosen to take. If you use GTC, auditing your open orders has to be a habit, not an afterthought.

A third, quieter mistake is assuming IOC protects your price. It does not. IOC controls time, not price. A limit price controls price. An IOC order with a limit far from the market will sweep every level up to that limit, which is exactly how people get a fill they describe later as slippage. If you want a tight fill, set the limit tightly and accept that less of your order will fill.

How to decide in one pass

Ask the three questions in order:

1. Do I want this filled at my price even if it takes time? If yes, GTC.
2. If not, would a partial fill be useful to me? If yes, IOC.
3. If a partial fill would be worse than no fill, FOK.

That is the whole decision. The instruction is a statement about your tolerance for waiting and for incompleteness, nothing more. If you are still sizing the order itself, the position size calculator settles the quantity before time in force settles its lifetime, and the difference between market and limit orders covers the price half of the same decision.

Education only, not financial advice, and trading carries a risk of loss.