Market-On-Close Order (MOC)
Candlefocus EditorMOC orders are most commonly used when a trader believes that there will be a change in the price of a particular stock at the market close. The trader thus uses the MOC order to try to benefit from any price movements that result from the anticipated change. Traders often choose to use MOC orders because they are more reliable than other more speculative trading methods and they can help reduce the risk of losses.
While the MOC order can be a useful tool for traders to take advantage of, it can also be risky. If the expected change does not materialize, the trader will be exposed to substantial losses. Additionally, an influx of MOC orders can lead to trade imbalances and illiquidity at the end of the trading day, as the orders compete with regular market orders and further drive up prices as they compete to be executed.
Despite the risks, many traders still choose to use MOC orders as their preferred technique for trading when they anticipate a change in the price of a stock at the close of the market. MOC orders allow for a more strategic approach to the trading, including the opportunity to buy or sell large volume amounts at the market close and to capitalize on opportunities that arise out of short-term market events.