All-or-None Orders in Stock Trading

An All-Or-None (AON) order is an order to purchase or sell a stock that must be executed in its entirety, or not executed at all (no partial transaction). In other words, the order will execute only if there are enough shares available in a single transaction to cover it.

For example, when you place an all-or-none order to your stockbroker requesting 500 shares of Company ABC at $12, your broker will not fill the order unless he can obtain the 500 shares at $12. If the shares of Company ABC are in such high demand that only 200 shares are available for purchase, then you must wait until the entire quantity (500 shares) is available for purchase.

The main disadvantage of all-or-none orders is "price inflation". For example, you want to purchase 3,000 shares of stock from James Ltd and you send an AON order to your broker with this decision. However, your broker informs you that there are only 1,800 shares of stock available for purchase, so you have to wait until the entire quantity (3,000 shares) is available. About 6 months later, your broker informs you that all 3,000 shares of stock in James Ltd are available, but the price per stock has increased by 25%. Since you did not cancel this all-or-none order, you are then forced to buy all the 3,000 shares of James Ltd.

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