What is a good ’til canceled order?
Good ’til canceled orders, also known as GTC orders, are very self-explanatory. GTC orders will remain active not unless they proceed to the execution of transaction or cancellation. Good ’til canceled orders can stay active for 30 or 60 days or more. Sometimes, some even last up to 90 days as a maximum.
GTC orders are related to time and always come with certain conditions like the desired price.
Day orders vs. Good ’til canceled orders
Anyone trader who encountered day trading already, then they might also be aware of a GTC order. Most day traders are not required to keep an eye on their orders because they automatically cancel at the end of a trading day if they did not proceed to execution. However, if the trading hits the desired price, then the order will execute automatically.
On the other hand, in good ’til canceled orders, even though their names might connote an idea that they will never expire, they will. Brokers usually put anywhere from 30 to a maximum of 90 days for traders’ orders until they expire to avoid forgotten orders. There is also no need for full-time supervision since they execute automatically once the desired price is hit. Let’s say that the broker placed 30 days for the order to remain active. Until then, the trader can keep it until hitting the desired price. However, after 30 days, if the price still does not conform to the conditions, then the broker will now try to reach out and ask whether the order will remain active or will get canceled.
Good ’til canceled orders as stop orders
In trading, there is also an order called “stop order” applicable to GTC orders. Once the GTC orders are placed as stop orders, the orders will sell once they become below the market price and buy once the orders become more than the market price. Traders commonly use this strategy to avoid losses and gain more profit.
Tips on trading with GTC orders
Traders should be alert to potential opportunities. For example, you finally have enough money to buy the limited edition shoes you’ve been eyeing for a long while now. You go to the store and saw that there would be a clearance sale in the next few days. As a wise consumer, you might want to wait for that sale to happen before buying unless there is only one stock left for the design you like and your shoe size.
The same is true in trading. Let’s say a stock is at $100, and you think even though it is a good investment, the price is too high. However, you would be more than willing to buy if the cost is only $93 or lower. Since you have no idea when the price might decline, you place a GTC order at your desired price.
On the other hand, if you anticipate that a stock’s price will massively decline, let’s say due to a news event, then you might want to consider selling.