What a kill!
A request to halt a deal between placement and fulfillment is a kill.
BREAKING DOWN Kill
Requests for kills are made after a trader places an order before a counterparty fills it. Investors may want to cancel trades due to unexpected changes in the market that affect a trade’s potential profitability, inadvertent order placement, or simple changes in their minds after the trade is placed.
The trade’s nature and the market’s state determine whether the kill is successful. Thanks to computer trading, many trades execute very instantly after placement, reducing the time available for a successful kill. Investors may also have trouble canceling trades on exchanges with high trade volumes since prompt notice of the trade’s completion or cancellation may be delayed. Regardless of whether the trader gets timely information, placing a trade entails liability for the order upon fulfillment for the investor or trader. Kill orders given or received after a trade is completed will not be fulfilled, and this does not absolve the trader of their obligation to execute the placing order.
Limiting Orders and Killing the Market
Traders have far more flexibility in scheduling placements that impede or delay fulfillment since a successful kill order necessitates submission before the order is completed. For instance, some traders will issue a fill-or-kill order to complete a large order at a particular price. Fill-or-kill orders occur in one significant transaction that either fills the entire order or as much of the order as possible, depending on the exchange and the type of order provided. Either way, the order must be filled at the designated price, and if no counterparties step up, the unfilled balance—in whole or in part—gets killed.
Conversely, limit orders delineate a timeframe within which an order becomes operative if the traded share reaches a designated price. An investor can use a stop-loss order to make sure that an investment that drops in value is sold before it loses too much. An investor can also use a take-profit order to establish a higher price at which they would like a sale to occur. A trader or investor could more easily cancel the trade in any scenario since the order is not completed until the dependent event occurs.
