A partially filled trade execution refers to a trade execution where a partial amount of your trade order is filled at your desired price. Do you want to know more about it? Then you are on the right platform. We are going to explain what partially filled means with definitions and real examples. So, stay tuned and know what you need to know.
Partially filled definition
A partially filled order means a trade execution where some but not all of your trade order is filled at a price of your choice. It usually happens when you place limited orders to buy a particular financial instrument.
In simple words, the broker manages to get a portion of your order executed at your desired price. The remaining unfulfilled order remains active until it gets filled or expired. Moreover, partially filled orders are common when trading on less-liquid stocks with fast-moving prices, especially if you are after buying a large number of instruments.
As you know, there are three types of orders – market, stop, and limit orders. Market orders refer to buying a particular instrument at the best possible market price. Stop orders refer to buying a financial instrument of your choice when the price goes above or below a certain level. Finally, there are limited orders that refer to buying within a certain price range.
Now, it is easy to understand partially filled orders. Partial fill generally happens when you place limit orders. Why so? Because you give your broker instructions to buy a certain amount of an asset during a predefined price range. Whenever the price will enter that range for too little volume, partial fill would happen. The reason is your entire order doesn’t get filled in one execution because of too low volume. Conversely, the other two order types continue to fill your order once triggered until the entire order gets filled.
Moreover, it is also important to understand what happens to the remaining order. The remaining order remains open and whenever the price falls again in your specified range, it gets filled. Moreover, your remaining order remains open even when the market closes. It remains open on the next day and the day after that, and so on until it gets completely filled or expired.
Partially filled examples
For example, you want to buy 20,000 shares of ABC Ltd. The average daily trading volume of this company is 200,000 shares. That means, your order makes up 10% of the average daily trading volume of ABC Ltd. So, the chances are high that your entire order won’t be filled in on execution. It may happen that your broker only manages to fill half or one-third of your order leaving your order partially filled.
How to avoid a partially filled order?
Generally, a partially filled order is an expected as well as accepted outcome when using limit orders. A trader is willing to accept any amount of a particular asset filled at the desired price. However, if you wish to avoid partially filled orders, there is a way to do it.
You should use a market order or a stop order to avoid partial fill. These order types continue to buy until the entire order gets filled. However, market orders and stop orders don’t fill your entire order at your desired price. Instead, they will execute your order at whatever price once triggered.
It is important for traders to understand partially filled trade execution because it is a common aspect of trading. However, it is also important to note that it isn’t a big issue that can negatively affect a trader.