What is a Market-On-Close Order or MOC
A market-on-close order or MOC is a non-limit market order. A trader executes an MOC order as close to the end of the market day as possible. On the New York Stock Exchange, a trader must submit an MOC order by 3:45 p.m. EST and 3:50 p.m. EST on the Nasdaq, as both exchanges close at 4 p.m. EST. Neither exchange allows for the modification or cancellation of MOC orders after those times.
Basics of Market-On-Close Order or MOC
Market-on-close order or MOC is a market order that will be executed at or just after closing. Traders deploy an MOC order when an investor wants to buy or sell a given financial instrument at the last price dealt in the market at the end of the trading day. MOC orders do not specify a target price. Traders sometimes use MOC orders as a limit order qualifier. This means that a limit order will be automatically canceled if it isn't executed during the trading day. This ensures that the desired transaction is executed, but it leaves the investor exposed to end-of-day price moves.
An MOC order offers protection to investors by ensuring the purchase or sale of a stock that might move drastically overnight as the result of a scheduled after-hours earnings announcement or an anticipated news story. Investors also find MOC orders when they are not available to execute an essential transaction at the end of the day. There is a risk of using an MOC order, however: a cluster of orders in the end-of-day trading can lead to a poor execution.
Types of Orders
MOC orders represent only one of a variety of order types. Among the most common is a limit order. A limit order stipulates that the asset must reach a target level before the trader executes the purchase or sale. The investor always places a limit order to be executed at a price higher than the market price of the asset at the time the investor places that order. Investors set limit orders so that the target price can take profit on an existing position, limit a loss or enter a new position. A stop-loss order is another kind of common order; this essentially is a worst-case scenario and again can take profit, limit a loss or enter a position.
The order cancels order (OCO) is a combination of a limit order and a stop-loss order. Either the asset hits the target level and the trader executes the trade, or the order is automatically canceled.
- A Market-On-Close (MOC) order is a non-limit market order that is executed at or after the closing of a stock exchange.
- A MOC order is placed in anticipation of a stock's moves of the next day.
Example of an MOC Order
Suppose a trader owns 100 shares of company ABC, which is expected to report negative earnings after the closing bell. ABC's earnings failed to surpass analyst expectations for several quarters. But its stock price has not displayed adverse price movement during the day. In order to minimize losses from a selloff in ABC's shares after its call, the trader places an MOC order to sell all or part of her share portfolio in ABC.