What Does GTD (Good-Til-Canceled) Mean in Trading?

Traders use various order types to buy or sell securities in financial markets. Among these, a Good-Til-Canceled (GTD) order is a common instruction given to a brokerage firm. Its primary purpose is to keep a trading order active beyond the single trading day it was placed. This order type allows traders to set a price for a security, and the instruction remains in effect until executed or canceled.

Understanding Good-Til-Canceled Orders

A Good-Til-Canceled (GTD) order is an instruction to a broker to buy or sell a security at a specified price. It remains active until filled or explicitly canceled by the trader. The core characteristic of a GTD order is its persistence in the market over multiple trading sessions. It does not automatically expire at the close of the trading day, unlike the default “Day Order.”

In contrast, a Day Order is active only for the current trading day. If a Day Order is not executed by the market’s close, it automatically expires, requiring the trader to place a new order the next day if they still wish to trade. The fundamental difference lies in their duration and persistence: a GTD order offers continuous market presence, while a Day Order provides a single-day opportunity. This extended duration makes GTD orders suitable for traders who are not actively monitoring the market throughout each day or who are waiting for a specific price point to be reached over a longer period.

How GTD Orders Operate

While a GTD order is intended to remain active for an extended period, it does not imply indefinite duration. Brokerage firms and exchanges often limit how long a GTD order can remain open. These orders may automatically expire if not filled within a specified timeframe, such as 60 or 90 calendar days. This automatic cancellation helps maintain order book hygiene and reduces the number of stale orders.

Corporate actions related to the underlying security can also lead to automatic cancellation. For example, if a stock undergoes a stock split, reverse stock split, or significant dividend distribution, an active GTD order may be canceled. Such events change the fundamental characteristics of the stock, potentially rendering the original order parameters irrelevant or incorrect. Similarly, if a security is delisted or undergoes a merger, pending GTD orders will typically be removed from the market.

Placing and Managing GTD Orders

Placing a GTD order is a straightforward process on most online brokerage platforms. When initiating a trade, after selecting the security and specifying buy or sell, traders choose the order’s duration. They select “GTD” from a menu, distinguishing it from a “Day Order.” The trader then enters the desired execution price and quantity of shares or contracts.

Once a GTD order has been placed and is active in the market, traders retain full control over its management. If market conditions change, they can modify the order’s parameters, such as adjusting the target price or quantity. This involves locating the active order in their account’s status section and selecting “amend” or “modify.” Traders can also manually cancel a GTD order at any time before it is filled by selecting “cancel,” removing it from the market.