A Good-Till-Cancelled (GTC) order is a type of stock order that remains active until the investor either cancels it or it gets executed. Unlike a day order, which expires at the end of the trading day if it isn’t filled, a GTC order carries over for days or weeks. This differentiator makes it a popular choice for those who have a specific price in mind and are willing to wait.
New investors often use a trading simulator to test out how GTC orders work in different scenarios. Simulated platforms allow users to practice placing orders and see how long it takes for them to execute. It’s a helpful way to see the difference between time-sensitive and open-ended order types.
The main appeal of a GTC order lies in its hands-off nature. Once the price is set, there’s no need to check back every day. It either hits or doesn’t, and the investor controls when to pull the plug.
How Do GTC Orders Work?
When a GTC order is placed, the broker holds it open until one of two things happens: the order is filled or the investor cancels it manually. Some brokers set their own time limits, typically ranging from 30 to 90 days, after which the order expires automatically if it hasn’t been executed.
The order is processed just like any other if the target price is reached during regular market hours. However, if the market never moves in the direction the investor anticipated, the order will simply stay open, unchanged. It’s important to note that GTC orders are not guaranteed forever, and brokers often send notifications before they expire.
Because the order sits in the system for an extended time, it’s important to monitor price movements and market news. While the GTC setup can offer convenience, a stagnant or declining market could leave an outdated order hanging longer than intended.
When (and Why) Do Traders Use GTC Orders?
GTC orders are particularly useful for investors who have a long-term outlook or a very specific entry or exit point in mind. For example, someone might only want to buy a stock if it drops to a particular price. Instead of checking the market every day, they can set a GTC order and let it sit until that price is hit or not.
This approach is also common for selling. If a stock is already owned and the investor wants to cash out at a higher price, a GTC sell order allows them to wait without reacting to daily fluctuations. It’s a method that emphasizes strategy over speed.
Using a GTC order can help reduce emotional trading decisions, especially in volatile markets. By pre-setting the price goal, the investor sticks to a plan rather than chasing momentum or acting out of fear.
What Are the Benefits of Using a GTC Order?
The primary advantage of a GTC order is its flexibility. It frees investors from having to watch the market all day and eliminates the need to re-enter the same order every morning. This is especially helpful for those who work full-time or prefer a more passive investing approach.
GTC orders also support more disciplined trading. By deciding on a price target ahead of time, investors can avoid making impulsive choices. It’s a tool that promotes thoughtful strategy rather than reactive behavior, giving investors more control over their portfolio’s activity.
Risks and Drawbacks to Consider
While GTC orders offer convenience, they come with a few important risks. A common issue is forgetting that the order is active. If a stock suddenly drops due to news or earnings, the order might execute when selling or buying is no longer ideal. That can lead to unintended trades that impact an overall strategy.
Another concern is market volatility. If a stock temporarily hits the set price before bouncing back, the GTC order could trigger during that brief dip. Some traders prefer to use alerts or conditional orders to avoid this scenario. Understanding how orders are filled in real time can help avoid frustration.
Most brokers also have expiration policies for GTC orders, even though the name implies they last indefinitely. It’s smart to review active orders regularly and understand each platform’s rules before relying on the GTC feature for long-term positions.
Is a GTC Order Right for You?
Good-Till-Cancelled orders offer flexibility and control, but they’re not for everyone. They work best for investors with clear price goals who don’t want to monitor the market constantly. Using a GTC order should be based on strategy, not convenience alone.
Before placing one, take time to understand how your trading platform handles expiration and notifications. Consider starting small and reviewing results over time. Used wisely, GTC orders can be a helpful addition to a long-term investing toolkit.
