An unfilled order is a fundamental concept in trading that every trader will encounter, whether they’re trading stocks, forex, CFDs, or indices. Simply put, an unfilled order is an order placed by a trader that has not yet been executed or matched with a counterparty in the market. This means the trade has not been completed, and the position has not been opened or closed as intended.

When you place an order to buy or sell an asset, the goal is for that order to be “filled,” meaning it has been matched with a corresponding sell or buy order at the specified price or better. However, sometimes orders remain unfilled due to a variety of market conditions or order characteristics.

There are several types of unfilled orders, such as limit orders, stop orders, or even market orders that don’t execute immediately due to liquidity issues. For example, a limit order is an order to buy or sell at a specific price or better. If the market price does not reach the limit price, the order will remain unfilled. A market order, on the other hand, should theoretically be filled immediately at the best available price, but in highly volatile or illiquid markets, even market orders can remain unfilled momentarily.

Understanding why orders remain unfilled is crucial. The primary reason is price mismatch. If your order is to buy a stock at $50, but the lowest sell order currently available is $52, your order cannot be filled until the price moves down to $50 or below. Similarly, if you place a limit sell order at $55, but the highest bid is only $53, your order stays unfilled.

A formula related to the execution of orders can be illustrated with the concept of order book matching:

If Buy_Price ≥ Sell_Price, then Order is filled
Else, Order remains unfilled

In practice, this means your buy order must be at or above the lowest asking price, and your sell order must be at or below the highest bid price for it to execute.

Real-life example: Imagine you are trading the EUR/USD currency pair (Forex). You want to buy EUR/USD at 1.1200 using a limit order. The current market price is 1.1230, and the lowest sell order is at 1.1230. Since your buy limit price (1.1200) is below the current market price, your order sits unfilled until the price drops to 1.1200 or lower. If the price never dips to that level, your order will remain unfilled.

Common misconceptions about unfilled orders include the belief that all orders will eventually be filled if left open. This is not necessarily true, especially for limit orders placed far from the current market price or in illiquid markets. Another mistake traders make is not monitoring unfilled orders, which can lead to missed opportunities or unintended exposure if the market moves significantly.

People often search for related queries such as “Why is my order not filling?”, “How long can an order remain unfilled?”, or “What happens to unfilled orders at market close?” It’s important to know that unfilled orders can typically be canceled or modified by the trader. Some platforms allow orders to remain active until canceled (Good Till Cancelled – GTC), while others expire at the end of the trading day (Day Orders).

In summary, an unfilled order is simply an order that has not yet been executed due to price, liquidity, or timing factors. Being aware of this can help traders manage their expectations, plan their order strategies better, and avoid common pitfalls related to unfilled trades.