Listen to a Business English Dialogue About Market on close order
Matthew: Hi Isla, have you ever used a market on close order in trading?
Isla: Yes, it’s an order to buy or sell a security at the closing price of the trading day. It ensures execution at the market’s closing price.
Matthew: That’s correct. Market on close orders are commonly used by institutional investors and traders to execute large orders efficiently.
Isla: Are there any specific requirements for placing a market on close order?
Matthew: Typically, brokers have specific deadlines for submitting market on close orders, and traders must ensure their orders are placed within these timeframes to be included in the closing auction.
Isla: What happens if a market on close order isn’t filled?
Matthew: If a market on close order isn’t filled, it remains unfilled, and traders may need to consider alternative strategies for executing their trades.
Isla: Can traders specify a price when placing a market on close order?
Matthew: No, market on close orders are executed at the closing price determined by the exchange, so traders cannot specify a price.
Isla: How do traders use market on close orders in their trading strategies?
Matthew: Traders use market on close orders to either initiate new positions or close existing ones based on their analysis of the day’s price action.
Isla: Are there any risks associated with using market on close orders?
Matthew: One risk is that market conditions can change between the time the order is placed and the market close, potentially resulting in unfavorable execution prices.
Isla: Can traders cancel market on close orders?
Matthew: Yes, traders can typically cancel or modify market on close orders before the market closes, but they should check with their brokers for specific cancellation policies.
Isla: Thanks for the explanation, Matthew. Market on close orders seem like a useful tool for executing trades efficiently.
Matthew: Absolutely, Isla. They offer traders a convenient way to participate in the closing auction and manage their positions effectively.