Key Takeaways
- A fill occurs when an order for a security or commodity is executed in the market.
- Market orders are filled quickly and are usually executed in full, given enough trading volume.
- Limit orders may not be fully executed if the set price is not reached, resulting in partial fills.
- Stop orders become market orders after hitting a defined target price, leading to automatic execution.
- Algorithms can dictate the timing or volume conditions for order fills, based on specified requirements.
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What Is a Fill?
A fill is an executed order. It is the action of completing or satisfying an order for a security or commodity. For example, if a trader places a buy order for a stock at $50 and a seller agrees to the price, the sale occurs at the fill, which records the execution price and timing. Traders use market or limit orders to shape how fills occur. Orders can be partially filled when conditions such as limit prices or available volume prevent the full order from executing at once.
How Fills Work
There are several types of ways investors may attempt to fill a securities order. The first and most straightforward approach is the market order. In this scenario, an investor instructs a broker to buy or sell an investment immediately at the best available current price.
This is usually a default option on an investor’s trading platform and highly likely to be executed. A market order is also sometimes called an unrestricted order and on average has low commissions, due to the lack of requirements, logistics, and effort needed to complete it.
Exploring Various Fill Order Types
In contrast, a limit order is an instruction to buy or sell a set amount of a financial instrument at a specified price or better. A limit order may not fill if the price the investor sets is not achieved during the period of time in which the order is left open. Limit orders may be canceled if this occurs.
Limit orders guarantee that an investor does not miss a chance to buy or sell if the security achieves his or her desired price target. Buy limit orders put a cap on the price above which an investor will not pay, while sell limit orders set a target for the cheapest price the investor will sell for.
A stop order (also called a stop-loss order) is a limit order that becomes a market order once the target price is achieved. For example, if a buy stop order is entered at a price of $20 (above the current market price), and the stock achieves this price, it will automatically purchase specified shares at the next available market price (e.g. $20.05).
In reverse, if a sell stop order is entered for $20, and the stock is declining, when it hits $20, it becomes a sell order at the next available market price, which could be $19.98.
Key Considerations for Executing Fill Orders
Investor orders will fill in various ways, based on the type of order entered into a broker’s system. While most orders will fill automatically when the price is triggered or achieved, at times, certain algorithms can specify that an order fills over a set period of time and/or based on the trading volume of a security.
If an order has a stipulation or condition such as a limit price, the order may only be partially filled. A partial fill, for example, would result from only 200 shares executed at a limit price of $53.00 when the complete order is for 1,000 shares.
This can happen if only that smaller number of shares is ever bid for at that limit price while the order still stands. Limit orders and those with time constraints are subject to partial fills, while market orders are almost always executed in full.
How Long Does It Take to Fill a Market Order?
For actively traded stocks, market orders are filled almost immediately. Unusual high volume can delay the trade, however.
Why Won’t My Pre-Market Order Fill?
Pre-market orders might not be filled during pre-market trading (4 a.m. to 9:30 a.m. EST) if there are not enough shares to meet your order. Large orders on stocks with low volume are harder to fill, especially in pre-market hours.
Do Limit Orders Fill Immediately?
Limit orders are only filled if the set price (or better) is available. Thus, limit orders only fill if a security reaches a certain price. There is no guarantee the order will be filled immediately or at all.
The Bottom Line
A fill is the execution of an order for a security or commodity. Market orders are usually filled right away, while limit orders wait for a specified price, and stop orders turn into market orders once a set price is reached. Partial fills can happen when price limits or low volume slow execution, so investors should consider order type and market conditions when trading.