Fill or kill (FOK) is a conditional time-in-force order that trades stocks, forex, metals, and energies. When a trader/investor uses this type of order, a broker must immediately execute an entire order or cancel it. Partial closing or opening of a position on a FOK order is prohibited. The order can be executed only in the stated volume. A FOK combines an all-or-none (AON) and immediate-or-cancel order (IOC).
Traders use fill-or-kill (FOK) orders to ensure that the whole order is executed in the shortest period. If the trader uses another type of order, it might take a long time to pack the entire position. Therefore, large-quantity non-FOK orders can cause price changes or market disruption due to prolonged execution. That is why market members who trade with a large capital prefer using the fill-or-kill type of order.
However, the fill-or-kill type of trade only occurs sometimes. Instead, traders prefer using “immediate or cancel” (IOC) or “good till canceled” (GTC) type of orders. IOC allows filling a part of the order immediately. GTC keeps the order open until a position is filled at a special price.
Assume a trader wants to open a long trade of lots in XAU/USD at $1800 per lot. A FOK order should be placed if the trader wants to purchase 1000 lots immediately, and no fewer, at $1800 (or lower). If a broker can sell 1000 lots of XAU/USD for $1800 per lot or less, the order will be filled. On the other hand, if a broker does not have 1000 lots of XAU/USD or does not want to sell them for $1800 or cheaper, the order will be killed.