In trading, the term fill or kill or FOK denotes an instruction delivered along with an order placed to a broker. The fill or kill instruction tells the broker that the order must either be filled within a predetermined time frame (normally instantly) or canceled entirely.
The most common use for the fill or kill instruction is to ensure that an order is either filled in full or not filled at all. When an investor places an order with a fill or kill instruction, the broker must find counterparties (buyers or sellers) for the entire order in order to execute the order at all. This is useful when the investor wants to perform a full trade at the listed market price, rather than have trades performed at multiple prices.
Fill or kill orders can also help investors making large purchases or sales of securities to avoid cost increases resulting from the added demand created by their own buy order, or cost decreases resulting from the added supply resulting from their own sell order.
Example of standard market order:
An investor places an order for 10,000 shares in a stock which is priced at 15 Swiss francs to the share at the time that the order is placed. Because they used a standard market order, the broker buys 5,000 shares from a seller for the going price of 15 francs. by the time the remaining 5000 shares became available, the price has increased to 16 francs per share, adding 5000 francs to the cost of buying the shares.
Example of a market order with a fill or kill instruction:
An investor places an order for 10,000 shares in a stock which is priced at 15 Swiss francs to the share at the time that the order is placed. Because the investor sent a fill or kill instruction to their broker along with their market order, the broker only performs the transaction if he can purchase all 10,000 shares immediately. In this case, only 5000 shares are available on the market, so the broker cancels the order.