Market-on-Close (MOC) Order
A Market-on-Close (MOC) order is an order type without any price limits set, executed as close to the market's closing price as possible. It is designed to capture the last price of the day, but availability varies by market and broker.
Definition and Execution Time
A MOC order aims to secure the day's final trading price. For the New York Stock Exchange (NYSE), such orders must be placed by 3:50 p.m. ET and cannot be canceled or adjusted after 3:45 p.m. ET. On the Nasdaq, submission is required by 3:55 p.m. ET, with a cancellation and modification deadline of 3:50 p.m. ET.
Primary Characteristics
MOC orders are executed at or just after a market closes, aiming to match the closing price. They remain inactive until just before the market closes, turning active and functioning like standard market orders. These orders facilitate entering or exiting positions at day's end prices without needing immediate action at market close.
Strategic Applications
Traders might use MOC orders in their strategies, such as exiting a position if certain price levels are met during the day. While these orders don't have a specified price, they can be employed as part of a limit-order strategy to ensure execution by day's end, thus exposing the trader to end-of-day price shifts.
Advantages and Disadvantages
MOC orders are useful for catching the closing price before overnight news potentially affects stock prices. They're also beneficial for those unable to execute trades at day's end or when trading in different time zones. However, the uncertainty of the execution price and the risk of concentrated end-of-day trading activity pose potential drawbacks.