A filled order in the context of financial markets refers to an order that has been successfully executed. This means that the trader’s request to buy or sell a security at a specified price has been completed. Once an order is filled, it is removed from the open orders list and reflects that the transaction has taken place.
Definition
A filled order can be succinctly defined as:
An order that has been completely executed in the financial markets, resulting in the agreed transaction between the buyer and seller.
Execution in Different Types of Orders
Market Orders
When a market order is placed, it is executed immediately at the best available current price. Once the transaction is completed, the order is considered filled.
Limit Orders
Limit orders specify the maximum price a buyer is willing to pay or the minimum price a seller is willing to accept. A limit order is filled when the market price reaches the specified level.
Stop Orders
Stop orders become market orders once a specified price is reached. Once this occurs and the transaction is executed, the stop order is filled.
Special Considerations
- Partial Fills: Sometimes, especially in large stock orders, an order may be only partially filled if there aren’t enough available shares at the desired price. In such cases, the order remains open until it is fully satisfied or canceled.
- Order Types and Timing: The nature of how an order is filled can depend significantly on the type of order placed and the timing within the trading day.
Examples
- Market Order Example: A trader places a market order to buy 100 shares of XYZ company. The order is filled instantly at the current market price, completing the transaction.
- Limit Order Example: A trader places a limit order to sell 200 shares of ABC company at $50 per share. When the market price reaches $50, the order is executed and subsequently filled.
Historical Context
In the history of trading, the concept of a filled order has evolved significantly with the advent of electronic trading platforms. Traditionally, orders were filled manually through brokers on the trading floor, a process that could take more time and involved significant human interaction. Today, with sophisticated algorithms and electronic systems, order filling can happen in milliseconds.
Applicability
The concept of filled orders is crucial in various financial instruments including stocks, bonds, commodities, forex, and derivatives. Understanding when and how an order is filled helps traders manage their strategies and expectations.
Related Terms
- Pending Order: An order that has been placed but not yet executed.
- Canceled Order: An order that has been withdrawn by the trader or due to market conditions before it could be filled.
- Partial Fill: An incomplete execution of an order where only part of the shares or contracts was traded.
FAQs
What happens if an order is not filled?
Can a filled order be reversed?
What causes a delay in order filling?
References
- “Introduction to Trading Order Types,” Investopedia. Link
- “Understanding Stock Market Orders,” NerdWallet. Link
- “Stock Trading Basics: Types of Orders,” The Balance. Link
Summary
A filled order is a fundamental concept in trading and investing, encapsulating the successful execution of an order placed in the financial markets. Understanding filled orders, alongside other order types, is key to effective trading and investment strategies. This term embodies the completion of a transaction, ensuring that the buyer or seller has achieved the desired outcome as specified in their trading directives.
