What Is a Good ‘Til Canceled (GTC) Order?

The good ’til canceled (GTC) order type is often the default order type in many brokerage accounts and is used by traders who are looking to capitalize on long-term market movements. GTC orders allow traders to specify a purchase or sell order that will remain in effect until the trader manually cancels the order or until the order is filled.

Pros and Cons of Good ‘Til Canceled Orders

The use of good ’til canceled orders has both advantages and disadvantages, which traders should consider before using this type of order. Some pros and cons of GTC orders are:

Pros:

1. Time-saving: GTC orders can save traders time because they don’t need to place orders every day. Once the order is placed, it remains active until it’s filled or canceled by the trader.
2. Opportunity: GTC orders can provide traders with the opportunity to take advantage of price movements that may occur outside of regular trading hours, such as overnight or on weekends.
3. Flexibility: GTC orders offer traders flexibility in managing their trades, as they can be canceled or modified at any time before they are executed.

Cons:

1. Risk: Because GTC orders remain active until they are filled or canceled, they may expose traders to more risk than day orders. The market may move in the opposite direction, and the trader may miss out on better opportunities to buy or sell.
2. Management: Because GTC orders expose traders to more risk than day orders, they require more management to minimize potential losses. This is not a set-and-forget type of order.
3. Fees: Some brokers may charge additional fees for GTC orders. Traders should check with their broker to determine whether there are any fees associated with this type of order.
4. Uncertainty: It’s difficult to predict when or if a GTC order will be filled, as it depends on market conditions and the availability of matching buyers or sellers.

In summary, GTC orders can be a useful tool for traders looking to save time and take advantage of potential price movements outside of regular trading hours. However, they also expose traders to additional risk and fees, and may not always be filled as expected. Traders should carefully consider their trading strategies and market conditions before using GTC orders and should consult with their broker for more information about any associated fees.

Good ‘Til Canceled Order Examples

Here are some examples of how traders might use good ’til canceled orders:

1. Buy Limit Order: A trader believes that a particular stock is undervalued and wants to buy it at a specific price point. They could place a GTC buy limit order with their broker, specifying the desired purchase price. The GTC order will remain active until it’s filled, canceled or the trader manually updates or cancels it.
2. Sell Limit Order: A trader holds a stock that they believe will increase in value over time, but they want to sell it when it reaches a specific price point. They can place a GTC sell limit order at the desired selling price. The order will remain active until the price is reached, or the trader manually cancels or modifies the order.
3. Stop-Loss Order: A trader holds a stock and wants to limit their losses if the stock price falls below a certain level. They could place a GTC stop-loss order with their broker, specifying the stop price at which they want the broker to sell the stock. The GTC stop-loss order will remain active until it’s filled, canceled, or the trader manually updates or cancels it.
4. Buy Stop Order: A trader believes that a stock price is about to rise and wants to buy the stock at a specific price above the current market price. They can place a GTC buy stop order with their broker, specifying the desired purchase price. The order will remain active until the price is reached or the trader manually cancels or modifies the order.

These are just a few examples of how traders might use GTC orders to execute their trading strategies.

Good ‘Til Canceled Orders vs. Other Types of Orders

Good ’til canceled orders are a type of limit order that traders can use to execute their trades. Unlike market orders, which are executed immediately at the best available price in the market, GTC orders remain active until they are filled or canceled, allowing traders to specify a specific price point for their trade.

Limit orders are another type of order that are similar to GTC orders in that they allow traders to specify a specific price for their trade, but they are not necessarily active until canceled. Limit orders can can be other types of others as well such as day orders, fill or kill (FOK), immediate or cancel (IOC), etc.

Traders should compare good ‘til canceled orders to other types of orders to determine which type of order is most appropriate for their needs.

The Bottom Line

Overall, GTC orders offer traders a convenient way to place long-term orders in the market without having to constantly monitor the price movements. GTC orders also provide traders with a certain level of price protection, allowing them to protect themselves from sudden price movements. For traders looking to benefit from long-term market movements, GTC orders are an ideal order type.