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