When placing orders in futures trading, you’ll encounter common options like limit and market orders. However, lesser-known instructions like FAK, FOK, and GFD also appear. What do these terms mean, and how can traders use them effectively in live markets?
Understanding FAK, FOK, and GFD Orders
1. FOK (Fill-or-Kill) Order
An FOK order must be executed immediately at the best available price—fully or not at all. If the order cannot be filled entirely at the specified price level, it is automatically canceled.
- Key Difference from Market Orders: While market orders guarantee execution (assuming sufficient liquidity), FOK orders are stricter—they demand 100% fulfillment or cancellation.
- Use Case: Ideal for traders who prioritize exact execution size and avoid partial fills.
2. FAK (Fill-and-Kill) Order
A FAK order executes partial fills at the best price and cancels any remaining unfulfilled volume.
- Key Difference from FOK: FAK accepts partial execution, making it more flexible.
- Use Case: Suitable for traders who want immediate liquidity without requiring full order completion.
3. GFD (Good-for-Day) Order
A GFD order remains active until the end of the trading day if not fully filled.
- Declining Relevance: In markets with fixed trading hours (e.g., traditional commodities), GFD functions like standard day orders. However, it’s more useful in 24-hour markets (e.g., cryptocurrencies).
FAK, FOK, and GFD Across Major Exchanges
| Exchange | Supported Orders | Notes |
|---|---|---|
| Shanghai Futures | FAK, FOK | Only during active trading hours. |
| China Financial | FAK, FOK | Supports hybrid market/limit orders. |
| Zhengzhou Commodity | FAK | No FOK or GFD. |
| Dalian Commodity | FAK, FOK | Allows both limit and market orders. |
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Who Uses These Orders?
Primary Users: High-Frequency Traders (HFT)
- Why? Speed and precision are critical. FAK/FOK eliminate manual cancellations, saving milliseconds.
- Profit Sensitivity: HFT strategies often rely on tiny price movements (“one-tick profits”), making limit orders + instant cancellations essential.
Rarely Used By:
- Retail Traders: Most platforms hide these options.
- Long-Term Investors: Execution speed is less critical for buy-and-hold strategies.
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FAQ
Q1: Can FAK/FOK orders improve my trading performance?
A: Only if you’re trading at high frequencies or need strict execution control. For most retail traders, standard limit/market orders suffice.
Q2: Why do some exchanges restrict these orders?
A: To prevent market manipulation (e.g., spoofing) and maintain fair liquidity.
Q3: Are FAK/FOK orders riskier?
A: They carry no additional risk but require understanding of order-book dynamics.
Q4: How do I test FAK/FOK strategies?
A: Backtest using historical data, but note live execution speed is irreplicable in simulations.
Q5: Can I use GFD in crypto markets?
A: Yes—especially useful for 24/7 markets where orders persist until manually canceled.
Key Takeaways
- FOK: All-or-nothing execution.
- FAK: Partial fills + instant cancellation.
- GFD: Day-long validity (niche use).
- Best for: Algorithmic and high-frequency traders.
By mastering these order types, you can optimize execution for speed-sensitive strategies.