What is an All-Or-None Order In The Stock Market?

People who invest in penny stocks in the stock market also frequently choose all-or-none-orders as a form of investment. By placing this kind of order a stock market investor ensures that they will receive the full number of shares at the price they request, or if this is not possible then they will buy none at all. This might sound like a good thing for the investor, but it does need a large amount of money to be able to manage it well.

Stockbrokers do not give priority to all-or-none (AON) orders, however, and the investor would be well advised to make sure that there are sufficient stocks available to make his or her order achievable before placing the order.

Here is an example to illustrate what is meant by an AON order. There are 700 of a particular type of shares available, but an investor wants to by 1,000 of them. If he places an AON order for 1,000, then he will have to wait until there are at least 1,000 of the shares available. In the meantime, however, the value of those shares could rise, which would cost him a lot more for the 1,000 shares than he was originally prepared to pay. There is also the question of whether the stockbroker can get the order through when the time comes.

When the full quantity of stocks does become available, the value could be lower, or might have remained the same as it was at the time of placing the AON order. The lower price is particularly likely if there has been a bear market, when lots of people are selling their shares, and this causes values to drop. In the case of an AON order, the investor will now spend less on his purchase than originally planned, and this means that the risk associated with the AON order is less.

Inflation is the biggest problem in connection with AON orders, because the investor might have to spend more money than he originally wanted. He could of course try to cancel the order, but if this is not possible he will have to go ahead and purchase the shares.

Having placed an AON order, there is of course also no guarantee that the requested stocks will be available, and they may not be available for quite some time, perhaps even a number of months. Again, the stock market investor may decide to cancel the order during this time, and not receive the shares he ordered. Because of the low priority allocated to AON orders by stockbrokers, this wait and subsequent cancellation is quite a common occurrence.

If you do decide to place an AON order, then be careful to select a stockbroker who is experienced with these orders and can be relied upon to do his or her best for you in this regard. Be wary of a stock market broker who is likely to cause delays in your order, because of their low priority for him.

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