Last month I was selling 1000 shares of a stock and I got a trade notification for a measly 20 shares. This is known as a partial fill. A partial fill occurs when you put in an order to buy or sell a stock and your brokerage can’t fulfill the entire order because there was insufficient shares at a particular price.
Every time you buy or sell stocks, you normally have to pay a commission to your broker. You will still need a pay a commission for a partially filled order. How much you owe depends on when and whether your remaining unfulfilled shares are executed.
In this post I’m going to explain everything you need to know about partial fills, how much commissions you can expect to be charged, and what you can do to avoid partial executions and paying extra commissions.
Partial Fills: What and How
When you are trading a stock, you have buyers on one side and sellers on the other. If you are trying to buy 100 shares of a stock for $10 a share, and a seller is willing to sell for $10 but only has 50 shares available, there is a possibility the trade executes with you receiving the 50 shares because there are only that many available at that price.
Partial fills are likely to occur when you are using limit orders with a set price. This possibility also increases when you are trading a stock with low volumes because there are less buyers and sellers and shares exchanging hands.
Market orders rarely have this issue because once placed they will continue to execute until the entire order is filled, no matter what the price is.
Commissions for Partial Fills
Generally, you are charged commissions for every day for part of an order is filled. That means you will only pay one commission if your entire order completes in one transaction or multiple transactions if they all occur on the same day.
Say you have a supersized order of 100,000 shares for Dunkin’ Brands and it takes five trading days before all the shares are acquired. You will be charged full commissions for five trades – one for each day, no matter how many times the order executes in a day.
I checked with a few online brokerages on their commission policies on multiple lots and here is what they say:
E-Trade – You will be charged one commission for an order that executes in multiple lots during a single trading day. Orders that execute over more than one trading day, or orders that are changed, may be subject to an additional commission.
TD Ameritrade – An order executed in multiple lots within the same trading session will be charged a single commission. When an order is partially executed in multiple trading sessions, the order is subject to separate commission charges for each trading session.
Fidelity – For commission purposes, orders executed over multiple days will be treated as separate orders.
Charles Schwab – Good ‘Till Canceled orders have the potential for multiple commissions if the order takes more than one day to complete. One commission will be charged for each day’s combined fills, based on execution prices and quantities.
For others online brokers, you may want to check their commission schedule on what you might be charged.
How to Avoid Partial Fills
You can avoid partial executions by including conditions when you place a stock order on how it can be executed. Two such instructions are all-or-none (AON) and fill-or-kill (FOK).
The “all or none” condition says that the order is only good if the entire order can be filled in one transaction. Otherwise the order will not be completed at all. I prefer to combine this with a limit order and a good until canceled time period.
The other option is using a “fill or kill” order, which will only execute if the entire order can be filled in full or it will be canceled immediately. This avoids the risk of a partial fulfillment.
How to Avoid Paying Extra Commissions
To avoid paying extra commissions you can put in only day orders instead of good till cancel orders.
An order that is only active until the end of the trading day will result in you only being charged one single commission for any executions that were done for the order, no matter how many were executed during the day. You may end up with a partial order or all your shares depending on what was available.
However, getting only 20 shares out of a 1000 share day order in an attempt to avoid paying an extra few dollars in commissions might not be such a great deal to many people.
When I got the partial execution, I had the perfect sequence of circumstances. I had put in a limit order for a price a bit higher than the last traded price. It was a bit after 4PM, when the market had just closed so there was less trading volume. It was a good til cancel order and the brokerage didn’t allow all-or-none to be selected for orders placed during extended hours.
If you don’t want to end up with a few shares executed like me, the most important thing to do is make sure you have all-or-none or fill-or-kill checked.
Should you end up with a partial execution during the day because you forgot to select the AON instruction, let the order stay active until the end of the trading day in case the broker is able to pick up a few more shares. You’ll still only be charged a single commission.
Have you ended up with a partial number of shares before?