What Does GTC Mean in Stocks & How Does It Work?
Uncover GTC stock orders: an essential tool for investors seeking persistent market instructions. Optimize your trading strategy with this enduring order type.
A Good ‘Til Canceled (GTC) order is a specific instruction to a brokerage to buy or sell a security that remains active beyond a single trading day. This order type is useful for investors who aim to execute a trade at a predetermined price but cannot monitor the market continuously. It allows for a persistent presence in the market, waiting for specified conditions to be met.
Understanding Good ‘Til Canceled
A GTC order remains open and active until it is fully executed or manually canceled. This persistence distinguishes GTC orders from “day orders,” which automatically expire if not filled by the end of the trading day. GTC orders provide the flexibility to target specific price points over an extended period. For instance, an investor might place a GTC buy order for a stock trading at $100, setting the desired purchase price at $95. This order will stay active until that price is reached or the order is withdrawn.
How GTC Orders Are Executed
Once placed, a GTC order resides within the brokerage’s system or on the exchange’s order book. The order continuously seeks to match with available shares at the specified price. If the market price reaches the target price, the trade will be executed. This process occurs automatically without requiring daily re-entry, allowing the investor to achieve their desired entry or exit point without constant market oversight. The order remains in effect through multiple trading sessions until its conditions are met, it is fully filled, or it is otherwise removed from the market.
Managing Your GTC Orders
Most brokerage firms impose an internal time limit on GTC orders, typically ranging from 30 to 90 days, after which the order automatically expires if not filled. If an investor still wishes to execute the trade after this expiration, they must re-enter the order. Significant market changes or corporate actions, such as stock splits, reverse splits, or large dividend distributions, can impact GTC orders. These events might lead to adjustments in order price and quantity, or even automatic cancellation by the brokerage. It is important for investors to regularly review their active GTC orders and manually cancel them if their trading intent changes or the order is no longer desired.