How Can a Trader Use a "Time in Force" Instruction to Mitigate Volatility-Induced Slippage? ▴ Learn

How Can a Trader Use a “Time in Force” Instruction to Mitigate Volatility-Induced Slippage?

A "time in force" (TIF) instruction dictates how long an order remains active before cancellation. Using an "Immediate-or-Cancel" (IOC) or "Fill-or-Kill" (FOK) TIF can mitigate volatility-induced slippage.

IOC ensures that any unexecuted portion of the order is immediately canceled, preventing it from being filled at a much worse price later. FOK requires the entire order to be filled immediately at the specified limit price or better, completely eliminating slippage risk but lowering the chance of execution.

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