What Is An All Or None (AON) Order?

What is an all or none (AON) order? An all or nothing (AON) order is an order to buy or sell all of a specified amount of a certain security at the market or at a specified price. If all shares specified...

An all or nothing (AON) order is an order to buy or sell all of a specified amount of a certain security at the market or at a specified price. If all shares specified cannot be bought or sold the order is not executed.

Usually, when you buy a substantial amount of a company's stock, your broker will fill your order over the course of several hours, days, or even weeks, as opportunity arises. This will keep you from "moving the market," drastically increasing or decreasing the price of the stock by flooding the market with a single, large order.

Sometimes, though, you may want to place one order at a single price. Investors do this as an efficient way to place your order while ensuring a minimum amount of bookkeeping. This is a big consideration if you are managing a large portfolio. The solution to numerous miniscule transactions is placing all-or-none trades.

Basically, all-or-none trades tell your broker that you do not want your trade executed unless he can manage to do it in a single transaction. The standard minimum amount for an all-or-none trade is three round lots or more (300 shares).

Keep the following points in mind when dealing with all-or-none trades:
1. Your all-or-none order will not be executed if there are not enough shares available in a single transaction to cover it. If it's essential to you that you buy a particular stock at a particular time, you're probably better off going with a regular market order than with a AON order.
2. All-or-none orders are not placed until all of the orders ahead of it with no special conditions are executed. Again, if immediacy is an essential attribute of this particular trade, rethink your strategy.
3. All-or-none orders can only be applied in conjunction with a limit order; market orders are not eligible for use with AON orders. You can get the same result by simply placing a limit order 10 cents above or below the current market price.
AON orders are very important for investors who rely heavily on penny stocks. The all-or-none orders will ensure that the investor gets all the shares he wants,or nothing at all.

Be careful about the following situation. Let's say you want 2500 shares of Microsoft stock, but your broker can't get them for you because there are only 1000 available at a time. Not until 10 months after your original AON order is placed can your broker get hold of 2500 shares. In the 10 months since you placed the price of Microsoft stock has risen substantially, so you end up paying much more for it than you would have otherwise.

Because this type of order can be stressful, it's imperative that you stay in close contact with your broker and financial advisor about the transaction. You don't want to make a wrong move, and it can be easy to do with AON orders.

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