What is a Held Order?

A held order is a market order directing a representative to fill the order, whether it is a buy or sell, immediately. Usually, representatives are able to exercise some discretion in filling orders so they can get the best price for their clients. With a held order, that is not possible, because the client wants the order filled fast, with less of a regard to price restrictions, and the goal is to complete it and close the deal as quickly as possible.

Both buy and sell orders can be issued in the form of a held order. People usually employ this kind of order when they want to change their market positions extremely quickly, as in cases where people sense that holding on to securities any longer could expose them to unnecessary risk. This type of order may also be issued in order to take advantage of an emerging situation or a specific order, with the representative being asked to act rapidly to get the order completed before the opportunity vanishes.

In normal conditions, representatives have time to shop around for the highest buy offers and the lowest sell offers, choosing an offer for the client that will result in the best outcome. With a held order, people may have to take high bids for asking prices and low offers for sales prices, because they are not allowed as much discretion in executing the order. Other traders can take advantage of this to get a better deal on a transaction when they know a held order is involved.

This type of order is generally issued by a knowledgeable trader who is confident in the market. People with limited experience or poor trading skills can run into trouble when directing trades too closely, as they may not understand market movements and could force their representatives to make poor investment choices while acting on their behalf. A personal finance adviser or broker can help people decide on the best type of order to issue in a given situation, or people can turn management of their stocks over to an experienced trader and allow that person a high degree of discretion in trading.

In rare cases, a held order cannot be filled, as for example if people are trying to sell and no one is buying. In these situations, the person who issued the order will be contacted to provide information about why the order failed and to ask for further directions.