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Highlights:
- A GTC order remains active until executed or manually cancelled.
- Brokerages impose expiration limits, usually 30-60 days.
- Differs from a day order, which expires at the end of the trading day.
A Good 'Til Cancelled (GTC) order is a trading instruction placed by investors to buy or sell a stock at a specified price, which remains active until it is executed or canceled by the trader. Unlike a day order, which automatically expires at the end of the trading session if not fulfilled, a GTC order persists across multiple trading days, allowing traders to secure their desired price over an extended period.
How GTC Orders Work
When a trader places a GTC order, it stays in the market until one of three things happens:
- The order gets executed at the specified price.
- The trader manually cancels the order.
- The brokerage firm enforces an expiration date (typically 30-60 days).
Brokerages impose expiration limits to prevent outdated orders from being left in the system indefinitely. If an order reaches its expiry period without execution, the trader must re-enter it to maintain the position.
Advantages of GTC Orders
- Time Flexibility: Investors do not need to monitor the market constantly.
- Targeted Pricing: Traders can lock in a specific buying or selling price.
- Reduces Emotional Trading: Helps investors stick to their strategy without making impulsive decisions.
Disadvantages of GTC Orders
- Market Volatility: Sudden price changes can impact execution timing.
- Brokerage Policies: Different brokers have varying expiration periods.
- Partial Execution: Orders may be partially filled, leaving unexecuted shares.
GTC Order vs. Day Order
A day order expires if not executed within the same trading session, making it suitable for short-term traders who react to daily market movements. In contrast, a GTC order offers flexibility, enabling long-term traders to take advantage of price fluctuations over several days or weeks.
Conclusion
A Good 'Til Cancelled (GTC) order is a powerful tool for investors seeking control over their trades without the need for daily monitoring. While it provides flexibility and price targeting, traders should remain aware of brokerage policies and market conditions that may affect execution. Understanding the differences between GTC and day orders can help investors make informed decisions based on their trading strategy.
