A fill or kill order (FKO) is an order to purchase or sell a large quantity of stock that has to be executed immediately, usually within just a few seconds, or the order will be ‘killed’ off.
In other words, the brokerage is instructed to buy/sell everything at once, super fast, and if that is not possible, sell/buy nothing at all.
The purpose of a fill or kill order is to ensure that an exchange is put through at a specific price and reduce the time it takes to complete a large order.
A fill or kill order is treated the same as an IOC (immediate or cancel) or AON (all or none) order.
When are fill or kill orders used?
Fill or kill orders are typically used in scenarios where the order for a particular stock is for a very large quantity and is treated as a market limit order that needs immediate attention.
These types of orders are also employed when there are different unlinked markets open for the same asset. In this case a fill or kill order allows a trader to fill out each order sequentially – without having to manually cancel it if it is not fulfilled. Essentially this means that no partial execution of the order is allowed.
On some exchanges, a fill or kill order is a market or limit order that is executed by filling the number of shares that are made available by the first bid or offer, and then canceling any unfilled balance.