September 15, 2011 | In: General

What Is the Average Fill Time of an Order?

New traders are often not clear on how much time it takes an order to get filled. Sometimes an order is filled instantly, sometimes it takes hours. So what is the average fill time of an order?

While there’s no scientific data on this, I think it’s safe to say that most orders are executed instantly, or within seconds. It is important to note that the fill time of an order is directly related to the following:

- The liquidity of the stock (for example, C and BAC are very liquid, while low volume stocks are not that liquid at all): The more liquid the stock, the less time it takes for the order to be executed.

- The demand on the stock: Sometimes, when there is some important news about the stock or something related to the stock, there will be huge demand on both sides, and the system for processing the orders will get choked. I remember that my order took hours when I was trading HOUs (oil bullish ETFs) when there was some very important news about oil.

Why do traders need to care about the average fill time? Well, when I bought HOUs a few months ago and my order took hours to get processed, I remember thinking that I bought them at one price and the order was executed at another, higher price. I remember also the same scenario happening, I wanted to sell HOUs, and my order took hours, and then eventually they got sold at a lower price (I couldn’t even cancel the order). I do think that banks make millions out of this game, imagine the following scenario:

- There is a huge load on the system processing the orders, but your buy order goes through anyway
- The bank doesn’t tell you that your order went through
- If, in a few hours, the stock price goes up, then the bank will make it like that the order was processed at the higher price and take the difference between the two prices
- Now If the stock price goes down in a few hours, then the bank will tell you accurately that your order was processed a few hours ago
- And that’s how banks make money!

2 Responses to What Is the Average Fill Time of an Order?

Avatar

What Time Does Pre-market Trading Begin? « Fadi El-Eter

October 3rd, 2011 at 12:01 pm

[...] I remember during the first months when I first started trading stocks, I woke up one day and logged in to my account on my broker’s website, and I saw that C was so delicious at around $3.80 (that was before they did the reverse split). I placed the order at around 8:00 AM, but the order was not filled immediately. I waited for 1 minute, 5 minutes, 10 minutes, and the order was still not yet filled. What made me angry was that the price of C was increasing every second, and my order is still not filled (yet I know that C is a very liquid stock, and that its fill time is way above the average fill time). [...]

Avatar

How Many Trades Can I Make Per Day? « Fadi El-Eter

February 2nd, 2012 at 2:19 pm

[...] average fill time (sometimes it can take a long time to get your order filled, see what is the average fill time of an order?). This can take about 5 seconds on [...]

Comment Form