Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Cancel Former Order

What it is:

Cancel former order is a specific type of trade order a client places with a broker in order to cancel an unfilled buy or sell order.

How it works (Example):

For example, if a client has an outstanding order to buy 100 shares of Company XYZ at $15 per share and decides he wants to buy the shares at the current market price of $17 per share, he must submit a cancel former order for the pending instructions and replace it with a new order to buy at the market price.

Why it Matters:

A cancel former order (CFO) is generally used for cancelling a limit order (the order is transacted only once the security reaches a specific price level) when the investor decides the current market price is more advantageous than the limit. CFOs also ensure that orders are not placed more than once, should a client change his mind and wish to alter a current order