A fill or kill, FOK, order is a type of execution order that can be placed with a brokerage for the buying or selling of a security. When the brokerage receives the order, it either executes the order for the entire quantity at the desired price (or less) or it cancels the order completely without trading any lesser amount than the total desired quantity.
FOK Order Example
Suppose that an investor places a fill or kill order with their broker for 100 shares of Company A at $15 per share. The broker will immediately look to see if this entire order of 100 shares can be filled at $15 or less per share.
The broker finds only 70 shares of Company A available for $15 or less, so it cancels the order completely without buying the 70 shares available for $15.
Trading with a Fill or Kill Order
Fill or kill orders are generally used when an investor is looking to take a large position without moving the market. If the investor can only get a lesser amount than the total desired at the specified price, then they might start moving the price before they can execute the full quantity.
Being unable to execute the full quantity at the desired price may erode the profitability of the position sought to the point that the investor would prefer to not make the trade at all.
Final Thoughts
In practice fill or kill orders are rare, as large institutional investors prefer to spread large orders across multiple brokerages and develop large positions slowly over time.
The existence of “dark pools” for trading outside of traditional exchanges also allows investors to build up large positions in relative secrecy.
However, there are a few rare occasions when investors may use a fill or kill order, such as taking a relatively large position in a smaller company or asset type.