Quick Answer

Time in force is a standard order setting that digital asset traders use when placing a trade. The instruction determines how long an open order stays alive before it executes or expires. 

Major Takeaways

• Time in force is a trading instruction that specifies how long an order stays alive before the system automatically fills or cancels it.

• The three most common time in force orders are good till cancelled (GTC), immediate or cancel (IOC), and fill or kill (FOK).

• GTC orders stay open and active till you manually cancel them, or the asset reaches your limit price.

• An IOC instruction fills your limit order immediately with the available asset quantity in the market at your limit price and cancels the remaining portion.

• FOK fills the entire order immediately if it matches the quantity and price available in the market. If it does not, the setting cancels the entire order. This time in force setting does not allow partial fills.

What Time in Force Actually Controls

When you place a trade order, the system can fill the order, cancel it, or let it expire. This execution or expiration depends on the instruction you gave with the order. 

When it comes to limit or market orders, the order type determines the time in force options that you can apply. Time in force matters more when you are placing a limit order because a market order fills immediately.

As with spot orders, time in force applies to Futures orders. The instruction simply determines how long the order will remain open before it executes or expires. 

There are three common types of time in force orders:

1. Good Till Cancelled

2. Immediate or Cancel 

3. Fill or Kill

GTC: Good Till Cancelled 

The time in force GTC order is very prevalent in most trading markets. A GTC order remains open till the price of the asset reaches the trader’s desired price mark or the trader decides to cancel the order. 

A GTC order can also fill partially over time till the open order fills. The time in force GTC order is ideal for investors who have more interest in price and can play the long game.

IOC: Immediate or Cancel 

An IOC order allows the immediate partial execution of limit orders based on market liquidity. The unfilled part of the order cancels immediately. 

If the asset volume available in the market for your set price is lower than your total order size, the setting will fill what is available in the market for you at that moment and then cancel the remaining unfilled portion. 

FOK: Fill or Kill 

FOK orders are stricter than IOC orders. The fill or kill order type does not fill partially; it is either the entire order size fills immediately, or everything gets cancelled. 

How Time in Force Changes Your Fill

The instruction controls whether your open order will get a full, partial, or no fill. For instance, John wants to buy 2 $BTC via a limit order at $70,000.

He heads over to the XXKK market, checks the order book, and sees 0.8 BTC available at an asking price of $70,000 and another 1.5 BTC available for $70,100. At this point, John can only buy 0.8 BTC at his set limit price. 

Here is what the different time in force settings will do for the order.

• If John selects IOC, the order will partially fill. The system will match his order with the 0.8 BTC available at $70,000 immediately and cancel the remaining 1.2 unfilled BTC instantly.

• If John selects FOK, XXKK will check whether the full 2 BTC for $70,000 can fill at that price or better. But the book shows only 0.8 BTC at that price. So it will cancel the entire order, leaving John with 0 BTC.

• If John selects GTC, the order will fill the available 0.8 BTC but will not cancel the unfilled 1.2 BTC. Instead, the order will remain open till sellers offer it for $70,000 or John cancels it.

• If the market had 2.5 BTC at the time John placed the order, regardless of the time in force order used, the entire order will fill.

Which Time in Force Should You Use?

If you are a crypto investor who likes long-term orders, then use GTC. Traders like you wait for the asset to get to a specific price over a long time, which is the perfect scenario for a GTC order. 

The IOC order is for traders who are in a hurry to execute their trades. They do not care about a partial fill. Usually, these kinds of traders do not like to see their orders open for long in the market. 

The fill or kill order is the ideal choice for investors who want their entire order to get filled instantly. For these kinds of investors, a partial order execution is useless and can break their trading strategy.

Conclusion

Time in force is very important in digital asset trading. The instruction tells the crypto exchange how long your order will remain open and running before getting filled or cancelled. 

You cannot change your time in force setting after placing an order. If you want to change the setting, you must cancel the existing order and open a new one with the new instruction. 

Open an XXKK account to set time in force on every order you place. Check the order book on XXKK before you choose between GTC, IOC, and FOK. Use IOC or FOK when certainty of fill matters, and GTC when price matters more.

FAQs

What does time in force mean?

Time in force is a setting you apply when selling or buying a digital asset. The instruction tells your trading platform how long your order will stay open before closing or getting filled.

What is the difference between GTC and IOC?

GTC orders stay active on the books till you manually cancel them or they fill gradually or partially when the asset touches your limit price. Partial fills for GTC do not cancel unfilled portions.

IOC executes your order immediately, partially filling what is available in the market at your limit price or better, and cancelling the unfilled part at the same time.

When should I use fill or kill?

When you want your entire order to get filled at once, then you can use the fill or kill order. This order type prevents your orders from partial fills. 

Does time in force apply to market orders?

Time in force can apply to market orders, although it doesn’t matter so much.