Good ‘Til Cancelled
Good ’til canceled (GTC) orders allow investors to purchase or sell a security until it is filled or canceled. Brokerages commonly restrict the GTC order duration to 90 days.
Immediate or cancel (IOC) orders differ from GTC orders.
- Until canceled, a Good ’til Cancelled (GTC) order works.
- GTC orders can reduce portfolio management for traders.
- Exercising GTC orders during price rallies or volatility is risky. Prices may decline, causing traders to suffer losses.
Good ‘Til Canceled basics
GTC orders are an alternative to day orders, which expire after the trading day if unfulfilled. Despite their name, GTC orders seldom last forever. To prevent filling a forgotten GTC order, most brokers expire them 30–90 days after investors place them.
GTC orders allow investors who don’t monitor stock prices to place buy or sell orders at certain levels for weeks. The transaction will execute if the market price meets the GTC order before expiration. Investors can use GTC orders as stop orders, setting sell orders below the market price and purchase orders above it to minimize losses.
GTC orders are usually executed at their limited price. There are exceptions. Suppose the price per share fluctuates between trading days, skipping the limit price on the GTC order. In that case, the order will be completed at a greater rate for sell orders and a lower rate for purchase orders, favoring the investor who placed the order.
GTC Order Risks
NYSE, Nasdaq, and others no longer accept GTC orders, including stop orders. They consider such orders a risk for investors who may experience unfavorable execution owing to market volatility. Although most brokerage companies execute GTC and stop orders internally, they provide them.
In a day of extraordinary volatility, the price may rise over the GTC order’s limit price before reversing. Volatility might trigger a sell-stop order when stock prices fall. If the price instantly recovers, the investor must purchase high to recapture the position after selling low.
Example of GTC order
Investors frequently set GTC orders to purchase or sell below or above the current trading level. Investors can place GTC purchase orders at $95 if a stock trades at $100. The trade will execute if the market reaches that level before the investor cancels or expires the GTC order.
