Market-on-Close (MOC) Order

What Is a Market-on-Close (MOC) Order?

A market-on-close (MOC) order is a non-limit market order, which traders execute as close to the closing price as they can — either precisely at, or somewhat after the market close. The purpose of a MOC order is to triumph ultimately the last available price of that trading day. MOC orders are not available in all markets or from all brokers.

On the New York Stock Exchange (NYSE), for instance, traders must present a MOC order by 3:45 p.m. EST, and on the Nasdaq, they must present a MOC order by 3:50 p.m. EST, as the two exchanges close at 4:00 p.m. EST. After those times, neither one of the exchanges permits traders to alter or cancel MOC orders.

Rudiments of Market-on-Close Orders

A market-on-close order is essentially a market order that is scheduled to trade at the close, at the latest trading price. The MOC order stays dormant until close to the close, when it becomes active. Once the MOC order becomes active, it acts like a normal market order. MOC orders can assist investors with getting into or out of the market at the closing price without putting in a market request promptly when the market closes.

Traders frequently place MOC orders as part of a trading strategy. For instance, a few traders will need to exit at the close by one or the other buying or selling a given financial instrument on the off chance that a certain price level was penetrated during the trading day. MOC orders don't indicate a target price, yet traders sometimes use MOC orders as a limit-order qualifier — and that means that a limit order will be automatically canceled in the event that it isn't executed during the trading day.

Utilizing a MOC order in this manner guarantees that the ideal transaction is executed, however it actually would leave the investor presented to end-of-day price movements.

Despite the fact that putting a market-on-close (MOC) order can guarantee that your buy or sell order will happen at the close of trading, it doesn't guarantee the price.

Benefits and Risks of Market-on-Close Orders

There are a number of situations where an investor should get the closing price of a security. Assuming that you suspect that a company's stock could move drastically for the time being — as the consequence of a scheduled after-hours earnings call or an anticipated report, for instance — then, at that point, putting in a MOC request would guarantee that your purchase or sale would occur before the news breaks the next day.

MOC orders can likewise be convenient when an investor knows that they won't be available to execute an essential transaction, such as exiting a position, by the day's end. Having the option to place market-on-close orders is likewise valuable if you have any desire to trade on a few foreign exchanges that are not in your time region.

An undeniable drawback of MOC orders is that, in the event that you won't be available at the close of the market, then, at that point, you truly don't be aware at what price your order will be filled. In addition to risking end-of-day price fluctuations, MOC orders can likewise risk being shoddy as a result of end-of-day trading clusters, however this is rare.

Illustration of a MOC Order

Assume a trader claims 100 shares of company ABC, as would be considered normal to report negative earnings after the closing bell. ABC's earnings have failed to outperform examiners' expectations for several quarters, however its stock price has not shown adverse price movement during the day. To limit losses from a selloff in ABC's shares after its earnings call, the trader places a MOC order to sell all or part of their shares in ABC.

Features

• A flood of MOC orders can make trade irregular characteristics toward the finish of the trading day.
• A Market-On-Close (MOC) order is a non-limit market order that is executed at or after the closing of a stock exchange.
• Traders generally would place a MOC order in anticipation of a stock's movement the next day.