What is an IOC order? The Complete Guide to Using Order Timing Strategies on Bybit

In cryptocurrency trading, the method of order execution is key to successful transactions. In particular, IOC (Immediate or Cancel) orders are an essential tool for traders who need to make quick decisions in highly volatile markets. At Bybit, multiple “Time in Force” options are available to suit different trading strategies, allowing for more precise order execution by choosing among them.

What Is an Order Time in Force Strategy?

When placing a limit order, traders can set a “Time in Force” strategy, which controls how long the order remains active and how partial fills are handled. This setting determines the timing of order execution and whether partial fills are permitted. Both spot trading and perpetual futures trading on Bybit allow traders to select these order duration strategies.

Choosing the appropriate strategy based on your trading goals and market conditions can help prevent unintended executions at unfavorable prices and enable faster, more targeted trades.

Comparing the Three Order Execution Strategies

Bybit offers three main limit order execution strategies: GTC, FOK, and IOC. Understanding their features is essential for developing effective trading strategies.

What Is a Good Till Cancelled (GTC) Order?

A GTC order remains active until the trader manually cancels it or until it is fully filled.

The main advantage of this approach is flexibility. Traders can patiently wait for their desired price to be reached, making GTC orders suitable for medium- to long-term position building. Since orders can be canceled at any time, traders can adapt quickly to changing market conditions.

For example, if you want to buy 10,000 contracts at $8,001, but only 5,000 contracts are available at that price, the remaining 5,000 contracts will stay on the order book, waiting for future fills.

How the IOC (Immediate or Cancel) Order Works and When to Use It

Basic Characteristics of IOC Orders

An IOC order requests immediate execution at the specified price or better. Any portion of the order that cannot be filled immediately is automatically canceled.

This is not a strategy that disallows partial fills; rather, it allows for partial execution at the desired price, with the remaining unfilled portion canceled automatically. The order only executes within the available liquidity at the specified price range.

When to Use IOC Orders

IOC orders are particularly useful in the following scenarios:

• Rapid price movements: When you want to avoid the risk of executing at a different price due to slippage during fast market swings.
• Large orders: To prevent unexpected large fills at unfavorable prices.
• Limited liquidity periods: During nighttime or around major news releases when spreads widen.
• Short-term opportunities: When traders prioritize quick, small-scale fills at specific prices.

Difference from FOK (Fill or Kill) Orders

The key difference between IOC and FOK orders lies in how they handle partial fills.

• FOK orders require the entire order quantity to be filled at the specified price; if not, the entire order is canceled.
• IOC orders fill as much as possible immediately at the specified price or better, then cancel any remaining unfilled portion.

In other words, IOC orders offer flexibility by allowing partial fills, whereas FOK orders demand complete execution or none at all.

Understanding IOC Order Execution with an Example

Suppose a trader wants to buy 10,000 contracts at $8,001 or lower. The order book looks like this:

Sell Side Order Book

Current Price: $8,000 | Mark Price: $8,050

IOC Order Execution Result

If the trader places an IOC order to buy 10,000 contracts at $8,001, the execution would be:

Since there are 5,000 contracts available at $8,001 on the order book, that portion is filled immediately. The remaining 5,000 contracts cannot be filled at that moment and are automatically canceled.

Practical Use Cases for GTC, FOK, and IOC Orders

When to Use GTC Orders

• Building long-term positions based on clear target prices.
• Wanting to patiently wait for optimal execution without rushing.
• Swing trading, holding positions for days or weeks.

When to Use FOK Orders

• Ensuring the entire order is filled at once, suitable for short-term trades.
• Scalping or day trading where partial fills are undesirable.
• Making decisive trades where full execution is necessary.

When to Use IOC Orders

• Prioritizing execution at a specific price.
• Avoiding large, unexpected fills at unfavorable prices.
• Trading during volatile periods where quick, reliable order placement is critical.

Note that IOC orders work best in markets with high liquidity and tight spreads. In less liquid markets, the order may not execute as intended.

Choosing the Right Order Strategy for Your Trading Style

These three order strategies are straightforward: they are simply different settings for when and how to cancel or execute orders.

• Long-term holding: Use GTC orders to wait patiently.
• Full execution certainty: Use FOK orders to ensure complete fills or none.
• Price priority: Use IOC orders to prioritize fills at your desired price.

By mastering these options and applying them appropriately based on market conditions and your trading goals, you can execute more refined and effective trades. The key to success is selecting the optimal strategy according to market volatility, order size, and your trading timeframe.