Imbalance Only Orders (IO)

DEFINITION of 'Imbalance Only Orders (IO)'

Limit orders that provide liquidity during the opening cross and closing cross on the Nasdaq. Imbalance Only (IO) orders will execute only on the opening cross or closing cross. IO buy orders only execute at or below the 9:30am or 4pm bid price, while IO sell orders only execute at or above the offer price. Before opening/closing crosses are executed, buy/sell IO orders are re-priced to the best bid and ask price, respectively, on the Nasdaq book. IO orders must necessarily be limit orders; market IO orders are not permitted.

BREAKING DOWN 'Imbalance Only Orders (IO)'

IO orders are not displayed or disseminated. They neither add to an imbalance, nor do they establish the opening or closing price. Since IO orders are only executable during the opening cross or closing cross, they are not at risk of being executed prior to market open or close, unlike continuous market orders.

IO orders are accepted on the Nasdaq starting from 7am. Market participants cannot update IO orders for the opening cross after 9:28am, or update IO orders for the closing cross after 3:50pm. However, in both cases, new IO orders can still be entered after those deadlines.
 
Note that IO orders can sell short. Sell-short IO orders and sell IO orders priced at or below the best bid price are re-priced to the best offer price at 4pm. During the closing cross, sell-short IO orders are executed on a downtick only if the closing price is better than the best bid; these orders will not participate if the closing price is at or below the best bid.
RELATED TERMS
  1. Apple iOS (AAPL, GOOG)

    Apple iOS stands for Apple iPhone Operating System. iOS is currently ...
  2. Closing Cross

    A price discovery mechanism on the Nasdaq that crosses buy and ...
  3. Net Order Imbalance Indicator (NOII)

    Order imbalance information about the opening and closing crosses ...
  4. Limit Order

    An order placed with a brokerage to buy or sell a set number ...
  5. Cross

    When a broker receives a buy and sell order for the same stock ...
  6. Market Order

    An order that an investor makes through a broker or brokerage ...
Related Articles
  1. Insights

    Google Developing iOS Keyboard App (GOOG)

    Alphabet's Google division is working on an iOS keyboard app that incorporates gesture-based typing and search.
  2. Trading

    The Basics Of Trading A Stock

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

    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.
  4. Markets

    Understanding Order Execution

    Find out the various ways in which a broker can fill an order, which can affect costs.
  5. Markets

    Explaining Market Orders

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

    The Opening Cross: How Nasdaq Stock Prices Are Set

    The National Association of Securities Dealers Automated Quotations, commonly referred to as Nasdaq, is a computerized marketplace where stocks are traded from 9:30am to 4pm Eastern Standard ...
  7. Trading

    Which Order To Use? Stop-Loss Or Stop-Limit Orders

    Stop-loss and stop-limit orders can provide different types of protection for investors seeking to lock in profits or limit losses. Investors need to know how each type of order works to know ...
  8. Insights

    Apple Could Announce iMessage Expansion at WWDC (AAPL)

    Apple plans to announce several software improvements during its annual WWDC event this week.
  9. Trading

    How To Place Orders With A Forex Broker

    Learn how to set each type of stop and limit when trading currencies.
  10. Personal Finance

    6 Best Personal Finance Apps

    The right app can help you track your bills, monitor your bank accounts and credit cards, and otherwise stay on top of your financial life.
RELATED FAQS
  1. 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 >>
  2. What is the difference between a stop and a market order?

    Learn about market orders and stop orders, how they are used and executed, and the main difference between stop orders and ... 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. 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 >>
  5. Why is the execution of a limit order not guaranteed?

    Using a limit order to buy a stock can be helpful in securing certain prices, but the mechanics of a limit order can decrease ... Read Answer >>
  6. What are the advantages of a limit order over a market order?

    Understand the functional differences between a limit order and a market order and the respective advantages and disadvantages ... Read Answer >>
Hot Definitions
  1. Frexit

    Frexit – short for "French exit" – is a French spinoff of the term Brexit, which emerged when the United Kingdom voted to ...
  2. AAA

    The highest possible rating assigned to the bonds of an issuer by credit rating agencies. An issuer that is rated AAA has ...
  3. GBP

    The abbreviation for the British pound sterling, the official currency of the United Kingdom, the British Overseas Territories ...
  4. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  5. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
  6. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
Trading Center