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!