Definition of Limit on Close (LOC) Order

What does the term "Limit on Close" mean as it applies to the stock market? What is the definition of the term LOC?

A "limit on close" order is a type of limit order that is activated right before the close of trading. Unlike the "market on close" order, the "limit on close" order is not necessarily going to be executed.

Let's say that you own a stock and initiate a "market on close" sell order. This means that your market sell order will be executed right before the close of trading, regardless of what price you were hoping to get.

The risk of a market on close order, as you can see, is that you may end up with an unsatisfactory fill.

With the "limit on close" order, on the other hand, you are setting a limit order that may or may not be executed right before the close of trading.

For instance, let's say that you own 100 shares of Microsoft. You decide to play a limit on close sell order for your 100 shares, but only if the stock is trading for $20 or better. Now, your limit on close order will be activated, but Microsoft if trading below $20, your order will not be executed.

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