Held Order: What It Means and How It Works

Key takeaways
* A held order requires the broker to execute immediately—typically a market order—so the trade is filled without delay.
* It guarantees execution of the full order size but gives the broker little or no discretion on price or timing.
* A not-held order, by contrast, gives the broker time and price discretion to try to obtain a better fill.
* Held orders often carry an implicit immediate-or-cancel (IOC) condition: any unfilled portion is cancelled.

What is a held order?
A held order instructs a broker to fill an order promptly at available market prices. Because speed is prioritized over price improvement, brokers executing held orders have minimal discretion and will match the best current bid (for sells) or ask/offer (for buys).

How it works (examples)
* Market order example — If Apple (AAPL) shows a bid/ask of $156.90 / $157.00 and you submit a held buy order for 100 shares, the broker would buy at $157.00 for an immediate fill under normal market conditions.
* Illiquid stock example — If a small-cap shows bid/ask $1.50 / $2.25, the spread is $0.75. Buying at $2.25 to get an immediate fill means paying a spread equal to 33.3% of the ask (0.75 / 2.25). In illiquid markets this cost may be high, so discretion can sometimes produce a better execution.

When to use held orders
Held orders are appropriate when immediate execution is more important than obtaining a slightly better price:
* Trading breakouts — When you want instant entry to capture momentum and accept possible slippage.
* Closing an error position — To quickly unwind a mistakenly opened position and limit further downside risk.
* Hedging — To establish or close a hedging instrument quickly so the hedge remains effective relative to the underlying position’s price.

When not to use held orders
Avoid held orders when price matters more than immediacy, especially in illiquid securities with wide spreads. Using a not-held order or limit order gives brokers or the market time to find better prices and reduces spread-related cost.

Practical notes
* Held orders typically imply immediate-or-cancel behavior: any portion that cannot be executed immediately is cancelled.
* Slippage can occur when market makers or liquidity providers adjust quotes after receiving a market order; expect this risk in fast-moving or thin markets.

Summary
Held orders guarantee quick execution of a full or partial trade at prevailing market prices, trading speed for price discretion. Use them when immediacy is essential (breakouts, error corrections, urgent hedges) and avoid them when trading illiquid instruments or when minimizing transaction cost is the priority.