What Is a Cancel Former Order (CFO)?

A cancel former order (CFO) directs a broker to cancel a previously issued order. CFOs are used by investors who have changed their mind about a previous transaction and wish to change one or more of its parameters, such as the price offered or the amount of 澳洲幸运5官方开奖结果体彩网:securities involved.

Understanding a Cancel Former Order (CFO)

CFOs can only be used to cancel transactions that have not yet been executed or filled. Once a transaction has been executed, it becomes a binding contra⛄ct and cannot be revoked.

CFOs are often used in cases where market conditions are changing rapidly. For instance, in a falling market, the investor may sense that a bargain opportunity is available and issue a CFO to lower the pric๊e offered for a security.

On the o♊ther hand, in a rising market, an investor might feel that their previous order was not sufficiently high to be accepted by the sellers of a particularly popular security. In this scena🌳rio, they may need to issue a CFO and modify their order with a higher price.

When submitting CFOs, investors must exercise caution and remember that it takes ti🌃me for electronic trading systems to process and confirm these orders. If an investor issues a CFO request and then immediately produces a new order for that same security, it is possibl🃏e for the second order to be executed before the CFO is processed.

In that scenario, an investor might find themselves accidentally duplicating th♐eir order; the first and second order might both execute before the CFO. For this reason, it is best to wait until a CFO has been confirmed before placing a new order for that same security.

Example of a Cancel Former Order (CFO)

Suppose you are an investor wishing to buy 100 shares of XYZ Corporation. You believe its shares are fairly valued at their current market price of $10.25. However, you want to wait until they are a bit less expensive before making your purchase. To accomplish this, you place a limit order to buy 100 shares at a maximum price ofဣ $10.0✤0 per share.

In the following days, XYZ issues a surprisingly positive 澳洲幸运5官方开奖结果体彩网:earnings report, and its market price rises to $10.50. You re-evaluate the company and feel that its new earnings report more than justifies its new market price. Consequently, you feel that 🔜your previous l෴imit price of $10.00 per share is unnecessarily low.

Eager to buy in at the current market price, you issue a CFO request to cancel your previous order. Once the CFO has been executed, you issue a 澳洲幸运5官方开奖结果体彩网:market order to purchase XYZ shareꦓs at their current markﷺet price.