A:

When placing a market order for a security through a broker, there will be a commission accompanying the service. The fee charged can vary depending on whether the order is filled, canceled, modified or it expires.

In most situations, when an investor places a market order that goes unfilled, that investor will not be charged a fee. This is because the investor receives no benefit from the service. However, if the order is canceled or modified, the investor may find additional charges are added to the order.

For example, many of the major exchanges will charge members for orders that are canceled or modified. A member canceling an order placed on the Chicago Board Options Exchange will face a cancellation fee of $1.20 per order. The broker will often pass this cost on to clients. Limit orders that go partially filled will incur a fee, sometimes on a prorated basis.

The main thing to remember with brokerage fees is that each firm has a unique fee schedule. One brokerage may not charge a client for unfilled orders, while another may charge when an order is placed. Before placing an order, investors should know the details behind their brokers' specific fees.

For more information regarding commissions, read Paying Your Investment Advisor - Fees Or Commissions?

RELATED FAQS
  1. What kinds of fees are involved in futures trading?

    Learn what the various costs are that are charged by brokerage firms and trading exchanges to individual futures trading ... Read Answer >>
  2. Why do limit orders cost more than market orders?

    Learn the difference between a market order and a limit order, and why a trader placing a limit order pays higher fees than ... Read Answer >>
  3. How do I place a limit order online?

    Learn how a limit order is placed, the types of stocks it is most useful for and the specifications placed with it to suit ... Read Answer >>
  4. How can I use a buy limit order to buy a stock?

    Learn how a buy limit order is used by an investor who wants to buy a stock at a certain price, and understand how limit ... Read Answer >>
Related Articles
  1. Investing

    Explaining Market Orders

    A market order is the most common order used to purchase a financial security.
  2. Trading

    Understanding Order Execution

    Find out the various ways in which a broker can fill an order, which can affect costs.
  3. Financial Advisor

    Understanding Brokerage Fees

    Agents charge brokerage fees for facilitating transactions between buyers and sellers.
  4. Trading

    The Basics Of Trading A Stock

    Taking control of your portfolio means knowing what orders to use when buying or selling stocks.
  5. Trading

    NYIF Instructor Series: "Fill or Kill" Order

    In this short instructional video Anton Theunissen explains what the "fill or kill" order is.
  6. Investing

    Making The Trade: Understand Order Types

    Buying and selling stock can be a lot like buying or selling a car. Traders should use and understand tools such as market orders, limit orders, day orders, and good-'til-canceled orders to ensure ...
  7. Retirement

    How a 1% Annual Fee Can Ruin Your Nest Egg

    What kind of impact does an annual 1% fee have on your portfolio? The answer may surprise you.
  8. Managing Wealth

    The Most Expensive Brokerage Accounts For Traders

    A peek into the brokers whose brokerage charges are higher than average in the stock market world.
RELATED TERMS
  1. Cancel Former Order - CFO

    An order from an investor to a broker, to cancel a previously ...
  2. Immediate Or Cancel Order - IOC

    An order to buy or sell a security that if not immediately filled, ...
  3. Good This Month - GTM

    A limit order to buy or sell a security that remains in effect ...
  4. Day Order

    An order to buy or sell a security that automatically expires ...
  5. Canceled Order

    1. A previously submitted order to purchase or sell a security ...
  6. Brokerage Fee

    A fee charged by an agent, or agent's company to facilitate transactions ...
Hot Definitions
  1. Co-pay

    A type of insurance policy where the insured pays a specified amount of out-of-pocket expenses for health-care services such ...
  2. Protectionism

    Government actions and policies that restrict or restrain international trade, often done with the intent of protecting local ...
  3. Fiduciary

    A fiduciary is a person who acts on behalf of another person, or persons to manage assets.
  4. Demonetization

    Demonetization is the act of stripping a currency unit of its status as legal tender and is necessary whenever there is a ...
  5. Investment

    An asset or item that is purchased with the hope that it will generate income or appreciate in the future. In an economic ...
  6. Redlining

    The unethical practice whereby financial institutions make it extremely difficult or impossible for residents of poor inner-city ...
Trading Center