{"Ensure Timeliness: All MOC orders must be submitted by 3:50 p.m. Eastern Time (ET) for NYSE markets, beyond which changes or cancellations are restricted. Nasdaq requires MOC orders to be received by 3:55 p.m. ET, with no modifications or cancellations allowed post 3:50 p.m. ET.
“:”### Key Features to Know
“,“In essence, a MOC order transforms into an active market order as the trading day concludes, ensuring transactions occur at the last traded price. This eliminates the need for investors to manually place orders precisely at market close, thus simplifying end-of-day trading.
“:”Strategic Applications: Investors might set MOC orders at predetermined price breaches during the trading day or use them to exit positions just before close. This practice, however, doesn\u2019t shield them from last-minute price fluctuations. “,”* Triggers End-of-Day Imbalances: A rush of MOC orders near market close can create trade imbalances and impact the closing price.
“:”### Understanding Market-on-Close Orders
“,”## What Are Market-on-Close (MOC) Orders? “:“A Market-on-Close (MOC) order is an important tool for traders who want to execute market orders as close to the market\u2019s closing price as possible. The main aim of a MOC order is to seize the final available price of a trading day, ensuring entry or exit from the market at the closing price, although it doesn\u2019t guarantee the exact price due to end-of-day volatility.
“,”### Practical Example
“:“Imagine a trader who owns 100 shares of XYZ Corp. and predicts unfavorable post-market earnings results. To evade potential losses from an after-hours selloff, the trader sets a MOC order to sell their shares as near to the market close as possible, thereby locking in an end-of-day transaction as opposed to facing uncertain after-hours trading or opening price volatility the following day. “,”* Closing Price Execution: MOC orders are executed at or shortly after the stock exchange closure to catch the day’s final trading price. “:”* Anticipate Next Day\u2019s Movements: Traders often employ MOC orders to position themselves based on forecasts of overnight stock movements from events like earnings calls or breaking news stories. “,”## Benefits and Risks of MOC Orders
“:“MOC orders offer numerous advantages such as securing closing prices before anticipated overnight stock movements (e.g., post-earnings reports) and facilitating end-of-day trades in different time zones. Risks include unpredictability in end-of-day pricing and potential poor execution amidst high-volume trading clusters.
Related Terms: market order, limit order, earnings call, trader, position, execution.
References
- InteractiveBrokers. “Market-on-Close (MOC) Orders”.
