Not-Held Order
Candlefocus EditorThe advantage of a not-held order is that the broker has extra time to find the best possible price for their client. This gives the broker more opportunity to get a good execution price, especially during times where security prices are volatile or during times where there is a lack of liquidity in the market.
Not-held orders may be placed as market orders or limit orders, meaning the investor will specify a certain price that they are willing to pay or receive. In either case, because of the extra wait time, not-held orders absolve the broker of any liability or losses that may be experienced by the investor if the broker misses an opportunity to execute a trade because of the wait time.
Not-held orders can be used in a variety of situations, but the most common is when an investor is facing a situation where timing is critical. For example, if an investor wants to take advantage of an event driven increase or drop in the price of a security or when an investor or fund is trying to quickly execute a large trade.
Although not-held orders can be valuable in certain circumstances, investors should be aware of some of the risks associated with this type of trading order. The most critical risk involves the potential that the investor will not receive the same price he was expecting when the order was placed if the prices move quickly and market conditions have changed by the time the order is finally filled.
In conclusion, a not-held order can be a valuable tool for investors seeking to get the best possible price for their securities, but it is important to understand the risks associated with it. By carefully weighing the costs and benefits of using this type of trading order, investors can better protect their investments and make more informed decisions.