Overview§
A Good-Till-Canceled (GTC) Order is a type of order issued by an investor to buy or sell a security, generally at a predetermined price, which remains in effect until the order is either executed or explicitly canceled by the investor. This type of order extends beyond the single day duration of Day Orders, allowing for more control over the timing and conditions for trade fulfilment.
Examples§
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Stock Purchase: An investor places a GTC order to buy 50 shares of XYZ Corporation at $45 per share. This order will stay active until the price reaches $45 and the shares are purchased or the investor cancels the order.
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Selling for Profit: A shareholder holds 100 shares of ABC Inc., purchased at $30 each. They place a GTC order to sell their shares if the price hits $50. This order will remain active in the market until the share price meets the target, or it’s canceled.
Frequently Asked Questions§
1. How long does a GTC order remain active?
A GTC order remains active until it’s either executed or explicitly canceled by the investor.
2. Can GTC Orders be partially filled?
Yes, GTC orders can be partially filled. If conditions for the order are met for a part of the shares or securities specified, that portion will be executed, and the remaining order will stay active until fully executed or canceled.
3. Is there any time limit after which a GTC order will be canceled automatically?
While theoretically, a GTC order has no set expiration date, most brokerage firms have internal policies that limit the duration to a specific time frame, such as 90 days or six months, after which they need to be renewed.
4. Are there any specific securities that cannot be traded with a GTC order?
This can depend on the broker and the types of securities allowed on the trading platform. Some exchanges or brokers may not support GTC orders for certain low-liquidity or volatile stocks.
5. How does a GTC order compare to a Day Order?
A Day Order expires at the end of the trading day if not executed, whereas a GTC order remains active until it’s either executed or canceled by the investor, potentially staying in place for weeks or months.
Related Terms§
Fill or Kill Order (FOK)
A Fill or Kill (FOK) order is an instruction to execute a transaction in its entirety immediately at a specified price, and if the order cannot be executed fully, it is canceled immediately.
Online References§
- Investopedia on Good-Till-Canceled Orders
- SEC on Types of Orders
- FINRA on Market Orders, Limit Orders, and Stop Orders
Suggested Books for Further Studies§
- “Understanding Wall Street” by Jeffrey B. Little and Lucien Rhodes
- “The Intelligent Investor” by Benjamin Graham
- “The Little Book of Common Sense Investing” by John C. Bogle
- “A Random Walk Down Wall Street” by Burton G. Malkiel
Fundamentals of Good-Till-Canceled Orders: Finance Basics Quiz§
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