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When I place my trade order in the stock exchanges, I know the price matching happens and only when there is a buyer and seller at the same price a trade happens.

But how does the quantity matching happen? For example, if I want to buy 1000 shares at $100, but there is only one seller to sell 10 shares at $100, what happens then?

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But how does the quantity matching happen? For example, if I want to buy 1000 shares at $100, but there is only one seller to sell 10 shares at $100, what happens then?

This depends on the type of order you've placed. If you placed a fill-or-kill order, your order to buy or sell a certain number of shares

is routed to the trading floor for immediate execution. If the order cannot be immediately filled, it is cancelled (killed) automatically. Note that the order must be filled in its entirety. Partial fills are not allowed.

In your example, your buy order wouldn't be filled because it couldn't be matched to a sell order of the same volume.

This is similar to an all-or-none order, which is an order that contains

A condition instructing the broker to fill the order completely or not at all. If there is insufficient supply to meet the quantity requested by the order then it is canceled at the close of the market.

In this case, if your order wasn't matched to an order of the same volume by the time the market closes, it's cancelled.

If you simply placed a market/limit order, and (in the case of the limit order), part of your order was matched to another order with the right price, that part of your order will be filled, while the rest will remained unfilled.

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To answer your question in its entirety there's more information we need (exchange, session, traded security, order type, etc.).

Most exchanges support partial fills, that is your order will be partially executed and modified. In your example, you'd get an execution of 10 shares at $100, and your order ticket will be modified to $100 for 990 shares.

Like John Bensin explained, there are ways to prevent partial filling through order modifiers (e.g. Fill-or-Kill).

My addition here is, there are also ways to prevent the other bit, i.e. do the partial fill but don't keep a modified order in the system. You'd have to mark the order Immediate-or-Cancel (IoC). In your case you'd be partially filled (10 @$100) and that's it. For the remaining 990 shares you'd have to enter a new order.

  • Good answer; I forgot about IoC orders (I don't recall having personally used them, but I never place orders large enough to warrant it). – John Bensin Aug 20 '13 at 12:56

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