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What is a Market on Close?

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  • Written By: Mary McMahon
  • Edited By: O. Wallace
  • Last Modified Date: 11 September 2016
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A market on close (MOC) is a type of market order which directs that the sale or purchase of stock should occur as close to the end of the trading day as possible. Market on close orders can be used for a variety of reasons and in a variety of ways. Most computer programs which are designed to help people perform financial transactions offer this type of market order as an option when they prepare to buy or sell a stock.

Market orders in general are directives to buy or sell stock, ideally at the best possible price. There are a range of reasons to want a market order to be executed at the close of the trading day. One of the most common is the desire to take advantage of the uptick which can occur at the end of the trading day; if an investor knows that the value of a stock tends to rise at the end of the day, for example, he or she can issue a market order to sell at the end of the day to take advantage of this higher price.

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A MOC may also be issued if someone suspects that events which are expected to occur will cause a rise or drop in the price of a stock. For example, if a manufacturer is planning to announce quarterly earnings, a market on close allows an investor to get in or out easily. People may also issue this kind of order when they will not be available at the end of the trading day, and they believe that a stock should be bought or sold as the market is about to close.

On occasion, a situation known as an imbalance can develop. A market on close imbalance happens when a company issues an order to sell or purchase a large volume of stock, and the company's representatives cannot fill the order quickly enough. In this case, representatives publish information about the imbalance close to the end of the trading day, providing people on the trading floor with an opportunity to fill the imbalance. Such imbalances can drive prices up or down as people change positions to take advantage of the imbalance.

A market on close sell order can drive down the price of stock, as it may be unloaded at a low price to fulfill the terms of the order. Buy orders, on the other hand, can push stock prices up as people jockey to fill their market on close orders and other traders are alerted to the situation.

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sunshined
Post 4

It seems like I have never had good results trying to get out of a stock on a market on close order. If a stock is falling fast and I wait until the end of the day to sell, I usually get out at the low of the day.

Sometimes I may place a market order, but I have had the best results when I place a limit order. I feel like I have a little bit more control over where my order will be filled.

This seems to be the case more often with the Nasdaq market makers because many of the tech stocks are so volatile. If there is bad news and heavy volume, the stock drops hard and fast and if I wait until the end of the day to sell, I get the worst price.

golf07
Post 3

@SarahSon - Yes, earnings have surprised me many times. Very seldom do I place short term trades close to earnings. Sometimes it seems like earnings season goes on all year, but the most volatility is when they announce.

I have used all types of orders with equities trading and have found the market on close order can be beneficial on certain days and conditions. If I want to sell a stock for a certain reason on a particular day, it is nice to take advantage of that uptick at the end of the day.

If I hesitate and wait until the next day, there may be a big change in price and I might be sorry I didn't take advantage of the price at the previous close.

SarahSon
Post 2

It has taken me more than once to learn my lesson about placing market on close orders right before a company announces earnings. The price of a stock can fluctuate dramatically close to their announcement and the following day.

Sometimes this type of order works for my advantage, and other times it works against me. The times that I feel most comfortable placing an order like this is when I can really watch what is going on.

Many times even before placing this order I will have a 1 or 5 minute chart up so I can get a really good idea of what the stock is doing. It is also important to have a good broker so you receive a good trade execution and have a good fill on your order.

honeybees
Post 1

I have placed a lot of market orders when I have placed stock trades, but have never used a market on close order. If I was not able to watch the market during the trading day, it might not always be a wise idea to place an order like this.

Nobody ever knows what the market is going to do, and there have been many times when it goes completely opposite of the way I thought it would. If there was some kind of major announcement that affected the stock one way or the other, you might get filled on an order that you didn't really want to get filled on.

When I know I won't be available to watch the market when I am trading stock online, I will usually put in a limit order.

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