What is a 'Not-Held Order'

A not-held order is a market or limit order that gives the broker or floor trader both time and price discretion to get the best possible price. 

BREAKING DOWN 'Not-Held Order'

An investor placing a not-held order exhibits an excellent faith that the floor trader can attain a better market price than the current one. Although the floor trader has price and time discretion, he or she is not responsible for any losses that the shareholder may suffer because of this type of order. Often a not-held order is used for international equities as shareholders trust a trader's judgment more than their own. The opposite of a not held order is a held order, which traders must execute immediately.

Types of Not-Held Orders

  • Market Not-Held Order: This is a market order that the investor does not want executed immediately. For example, an investor might give the trader a market not-held order to buy 1,000 Apple (AAPL) with an instruction to execute the order at the best price they can get before the market close.                                                                                                                                                                                              
  • Limit Not-Held Order: An upper or lower limit is attached to this type of not-held order. For instance, a broker may receive a limit not-held order to buy 1,000 AAPL with an upper limit price of $200. This means the broker can execute the order at any price he or she sees fit, providing they don’t pay over $200. If the order were to sell the stock, the investor would set a lower limit price that the broker could not sell below. The broker is not held responsible if the order does not get executed and the stock goes on to trade above or below the set limit price.

Benefits of Not-Held Orders

Traders can read order flow and see trading patterns, which often gives them an edge when determining the best price and time to execute a customer’s order. For example, a trader may notice a reoccurring volume size on the buy side of the order book that suggests a stock’s price is likely to continue rising. This would result in the trader executing a client’s not-held order sooner, rather than later. They may also have other customer orders that they can cross simultaneously.

Limitations of Not-Held Orders

Once the investor gives a not-held order to the trader, they are placing full confidence in that individual to execute the trade at the best possible price. The investor cannot dispute the trade execution, providing the broker met all regulatory requirements. For instance, if a shareholder thinks the trader shouldn't have executed their not-held order before an FOMC interest rate announcement, they cannot seek a rebooking.

(To learn more, see: Introduction to Order Types.)

RELATED TERMS
  1. Day Order

    An order to buy or sell a security that automatically expires ...
  2. At The Highest Possible Price

    A type of security trading designation that instructs a brokerage ...
  3. Market-With-Protection Order

    A type of market order that is canceled and re-submitted as a ...
  4. Away From The Market

    An expression that is used when the bid on a limit order is lower ...
  5. Bracketed Sell Order

    A sell order on a short sale that is accompanied (or "bracketed") ...
  6. Discretionary Order

    An order giving a broker the ability to decide when to buy/sell ...
Related Articles
  1. Trading

    Understanding Order Execution

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

    Understanding Market Orders And Limit Orders

    A market order executes a transaction as quickly as possible at the present price. Immediacy is the main concern. A limit order is executed at or below a purchase or sale price. Price is the ...
  3. Investing

    The Basics of Trading a Stock: Know Your Orders

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

    Which Order to Use? Stop-Loss or Stop-Limit Orders

    While both can provide protection for traders, stop-loss orders guarantee execution, while stop-limit orders guarantee price.
  5. Investing

    Narrow Your Range With Stop-Limit Orders

    With stop-limit orders, buyers protect themselves from prices too high for their tastes.
RELATED FAQS
  1. 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 >>
  2. 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 >>
  3. 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 >>
  4. How do I place an order to buy or sell shares?

    Read a brief overview of how to open a brokerage account, how to buy and sell stock, and the different kinds of trade orders ... Read Answer >>
  5. How do I place a buy limit order if I want to buy a stock during an initial public ...

    Learn how to place a buy limit order to buy a stock during an IPO. IPOs can be full of risks, and buy limit orders are one ... Read Answer >>
Hot Definitions
  1. Fibonacci Retracement

    A term used in technical analysis that refers to areas of support (price stops going lower) or resistance (price stops going ...
  2. Ethereum

    Ethereum is a decentralized software platform that enables SmartContracts and Distributed Applications (ĐApps) to be built ...
  3. Cryptocurrency

    A digital or virtual currency that uses cryptography for security. A cryptocurrency is difficult to counterfeit because of ...
  4. Financial Industry Regulatory Authority - FINRA

    A regulatory body created after the merger of the National Association of Securities Dealers and the New York Stock Exchange's ...
  5. Initial Public Offering - IPO

    The first sale of stock by a private company to the public. IPOs are often issued by companies seeking the capital to expand ...
  6. Cost of Goods Sold - COGS

    Cost of goods sold (COGS) is the direct costs attributable to the production of the goods sold in a company.
Trading Center