Limit-On-Close (LOC) Order
Contents
Mastering the Limit-On-Close (LOC) Order: A Comprehensive Guide
Unlocking the Limit-On-Close (LOC) Order
The limit-on-close (LOC) order is a powerful tool in the arsenal of traders, allowing them to control the price at which they buy or sell securities at the market close. Unlike standard limit orders, LOC orders are specifically designed for execution at the closing price, offering traders precision and flexibility in their trading strategies.
Understanding the Mechanics of LOC Orders
LOC orders function by setting a predetermined price limit for the execution of a trade at the market close. This ensures that the trade is only executed if the closing price falls within the specified limit. Traders often use LOC orders to capitalize on increased liquidity at the close or to secure favorable closing prices for their trades.
Deciphering Limit-On-Close (LOC) Order Terms
Traders must be aware of the terms and procedures associated with LOC orders. These orders must be submitted by a specified deadline, typically shortly before the market close, and are only valid for execution on the same trading day. Additionally, LOC orders are not guaranteed to fill, as execution depends on the closing price meeting or exceeding the specified limit.
Exploring Examples of LOC Orders in Action
To illustrate the practical application of LOC orders, consider a scenario where a trader wishes to purchase a stock at the close but only up to a certain price. By placing a LOC buy order with a predetermined limit, the trader can ensure that the trade is executed only if the closing price meets their specified criteria. This allows traders to maintain control over their trading strategies and potentially secure favorable prices for their trades.
Key Facts about Limit-On-Close (LOC) Orders
- LOC orders are limit orders specifically designed for execution at the market close.
- Traders use LOC orders to control the price at which they buy or sell securities at the close.
- LOC orders must be submitted before a specified deadline and are only valid for execution on the same trading day.