What Does At Best Mean?

At-best orders are instructions to fill a transaction at the most desirable price available, and as quickly as possible.

Key Takeaways

  • At-best orders are instructions to fill a transaction at the most desirable price available, and as quickly as possible.
  • At-best orders guarantee execution when there’s a willing counterparty for the entire order, but it doesn’t guarantee the price.
  • At-best orders are useful for transactions requiring immediate execution, but can also be useful for investors who require no immediacy whatsoever.

Understanding At Best

At-best transactions can either be applied to equities or currencies where the trader would attempt to get the best possible price or rate respectively. At-best orders are generally executed faster than a conditional order, such as a limit order. The ultimate price a trader receives for a security is subject to the current market price, so the trader may wind up paying more (for a buy order) or receiving less (for a sell order) than expected.

At-best orders guarantee execution when there’s a willing counterparty for the entire order, but it doesn’t guarantee the price. Since you can’t set a price with at-best instructions, the actual price at which you may buy or sell may be higher or lower than expected. Thus, investors should be cautious when marking an order at-best.

When is At Best... Best?

Two instances where an at-best order could come in handy couldn't be further apart in motivation. In one case, at-best orders are useful for transactions requiring immediate execution while, on another hand, they can be useful for investors who require no immediacy whatsoever.

In the first instance, an at-best order makes sense for a strategy that requires immediate execution due to time-sensitive information. For example, when a strategist comes to a profitable realization before anyone else.

In the second example, and on the opposite end of the need for speed, certain long-term investors may simply mark an order at-best because they know they want to fill an order, but are unconcerned about price or immediacy. As an example, a hedge fund may want a certain asset class they're bullish on very long term, such as 20 years out, but doesn't feel the need to overpay for more expensive immediate execution. Here, they may simply say "buy it at whatever price"—as they know it won't matter given a long time horizon and a large expected price appreciation.