What Does Away-From-The-Market Mean?

Away-from-the-market order is a limit order where the buy limit order is lower, or the sell limit order is higher, than the current market price.

Key Takeaways

  • Away-from-the-market order is a limit order where the buy limit order is lower, or the sell limit order is higher, than the current market price.
  • An away-from-the-market order, if it is executed, would necessitate a move in that security's price in the direction that the order was placed.
  • An away-from-the-market order that is not filled could lead to a wider bid-ask spread for that security.

Understanding Away-From-The-Market

Away-from-the-market is an expression that is used in two different scenarios when a buy or sell price deviates from a current market quote for that particular security. This can happen when the bid on a limit order is lower than the current market price, or the ask price is higher than the current market price, for a particular security.

An away-from-the-market order, if it is executed, would necessitate a move in that security's price in the direction that the order was placed. In other words, a sell limit order higher than the market would only be filled if the market price moved higher, and vice versa. An away-from-the-market order that is not filled could lead to a wider bid-ask spread for that security.

An away-from-the-market order is a limit order to buy at a price lower than the current market price or an order to sell at a price higher than the current market price. Away-from-the-market limit orders are typically held for later execution, unless specified as fill or kill (FOK) orders, which are orders that must be completed right away and executed fully, or they will be canceled. Away-from-the-market refers to orders that are entered at a price that is not immediately available.

For example, a limit order to buy 100 shares of Acme Corporation at $28 is away-from-the-market if the stock is presently trading at $32 per share. Similarly, a limit order to sell 100 shares of Acme Corporation at $36 is also away-from-the-market when shares are currently trading at $32.

A limit order is one where the order is placed with the brokerage, which will execute a buy or sell transaction involving a pre-determined number of shares with a set limit price that must be met or exceeded. Limit orders set parameters that give the investor an extra level of control, since it allows them to define the period of time in which an order can be in progress and pending before it will be canceled.

A limit order is a good option if there is a specific price that you want or need to get. When you place an order of this type, there is no guarantee the order will be executed, and there is a possibly it will never be. However, if the order is executed, you are guaranteed to get at least the price that was established when you put the order in place.