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. How can I prevent commissions and fees from eating up my trading profits?

    First off, understand that there is no universal system regarding trading commissions charged by brokerage firms. Some charge ... Read Answer >>
  3. 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 >>
  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 >>
  5. How do you know if a trade placed to a broker is confirmed?

    Learn how to check if trades placed with brokers online or over the telephone have been filled and confirmed. Explore different ... Read Answer >>
  6. What's the difference between a market order and a limit order?

    Buy and sell trades with market orders at the present stock price and execute limit orders if the stock price falls within ... Read Answer >>
Related Articles
  1. Brokers

    Explaining Market Orders

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

    How To Start Trading: Order Types

    The types of orders you use can have a large effect on your trading performance, so understanding the different order types is important to your success.
  3. Investing Basics

    Understanding Brokerage Fees

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

    The Basics Of Trading A Stock

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

    NYIF Instructor Series: "Fill or Kill" Order

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

    Introduction To Order Types: Market Orders

    Note: Use a market order to guarantee a fill. A market order is the fastest and most reliable way to get in out of a trade. A market order is appropriate if getting filled is more important than ...
  7. Trading Strategies

    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 ...
  8. Investing Basics

    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.
  9. Personal Finance

    Are Financial Advisor Fees Too High?

    Fees charged by financial advisors run the gamut. Are you getting a fair deal or paying too much?
  10. Investing

    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. Day Order

    An order to buy or sell a security that automatically expires ...
  2. Good This Month - GTM

    A limit order to buy or sell a security that remains in effect ...
  3. Cancel Former Order - CFO

    An order from an investor to a broker, to cancel a previously ...
  4. Canceled Order

    1. A previously submitted order to purchase or sell a security ...
  5. Immediate Or Cancel Order - IOC

    An order to buy or sell a security that if not immediately filled, ...
  6. Market-With-Protection Order

    A type of market order that is canceled and re-submitted as a ...
Hot Definitions
  1. Physical Capital

    Physical capital is one of the three main factors of production in economic theory. It consists of manmade goods that assist ...
  2. Reverse Mortgage

    A type of mortgage in which a homeowner can borrow money against the value of his or her home. No repayment of the mortgage ...
  3. Labor Market

    The labor market refers to the supply and demand for labor, in which employees provide the supply and employers the demand. ...
  4. Demand Curve

    The demand curve is a graphical representation of the relationship between the price of a good or service and the quantity ...
  5. Goldilocks Economy

    An economy that is not so hot that it causes inflation, and not so cold that it causes a recession. This term is used to ...
  6. White Squire

    Very similar to a "white knight", but instead of purchasing a majority interest, the squire purchases a lesser interest in ...
Trading Center