Spread Betting Orders: Market On Close Order
Spread betting positions run on single trading day periods, with those still standing at the end of the day subject to a rollover to the next trading day. Rolling over positions subjects otherwise strong trades to the heightened volatility of market close and open, in addition to attracting extra charges, which can make already unpredictable markets behave even more unpredictably. With orders such as market on close orders (MOC), traders can automate their positions to close out in a timely fashion unless the trader actively chooses to do so at any prior point, safeguarding the security of their trading portfolio overnight.
Automating the trading process is, to a large extent, the core benefit of different order types, which act to safeguard trading decisions and enable traders to make critical calls ahead of time to protect their trading account. With MOC orders, traders can do exactly that, ensuring that all the metaphorical t’s are crossed as they progress towards a new trading day. A free order to implement, amend and cancel, MOC orders can be a highly useful addition to the trader’s toolkit, and are used widely by private and institutional traders alike as part of a wider approach to risk management.
How Market On Close Orders Work
Market on close orders are very simple in practice, and act as an automatic cap on the duration of a particular trade. If positions are left open to roll over to the next day, traders will incur additional charges from the broker in the first instance, in addition to having to weather the unpredictability of the opening stages of morning trading the next day. With other major world markets playing out beyond the closing point of the UK trading day, markets can behave in a very volatile manner as they adjust and respond to goings on around the world. Thus the market close order can be put in place to simply shut out the position at the end of the trading day, whether at a profit or a loss, in order to clear the slate for the next day’s trading.
Of course, market on close orders can also be implemented in conjunction with other orders, for example stop losses, so that traders can still protect against the risks of wayward positions while retaining the ultimate security of closure at the end of the present trading day.
When To Use Market On Close Orders
Market on close orders are best used to clear the desk at the end of the trading day, so it pays to use these orders when opening positions you’re sure you want to wrap up over the course of the present trading period. As a rule, most traders tend to close the majority of their positions before the day is out, because the defined break in trading sessions means that the position would otherwise have to roll over, and confront the rampant volatility of the market open the following morning. But as portfolios become larger and the number of positions you are engaged in increases, remembering to close down all positions before the close of the day can become an increasingly more tiresome and awkward burden – particularly for part-time traders who may not have the capacity to monitor their positions constantly throughout the day.
Market on close orders are free to implement, and so can be used very swiftly and effectively to ensure all the loose strings are tied up by the end of the day. Of course, there may be circumstances under which it would be beneficial not to close a position on the close of the market, in which case the MOC can be cancelled, or avoided if it is known in advance that the trader wants to roll his position overnight. However, by making use of the automation that MOC orders provide in ensuring all open positions are settled, traders can more effectively guard against the risks of holding on to positions for too long unnecessarily.