What Is a Good-Till-Canceled (GTC) Order in Stock Trading?

A Good-Till-Canceled (GTC) order is an instruction given to a brokerage for buying or selling securities. This order type stays open until it is executed, explicitly canceled by the investor, or expires based on the brokerage’s rules. It allows investors to place orders that do not need daily re-entry.

Understanding Good-Till-Canceled Orders

A Good-Till-Canceled order means the instruction to buy or sell a security remains active in the market beyond the standard trading day. Unlike a “day order,” which automatically expires at the close of the trading session if not filled, a GTC order persists. This means an investor can set a specific price target for a stock and have their order continuously monitored by the market without needing to re-submit it each day. The purpose of using a GTC order is to allow an investor to place an order at a desired price, whether it’s a limit order to buy at or below a certain price, or a limit order to sell at or above a certain price.

This order type is useful for investors who are not actively monitoring the market throughout the day or who are waiting for a specific price point to be reached over a longer timeframe. For instance, an investor might place a GTC limit order to purchase shares of a company if its price drops to a certain level. The order will then remain active, patiently waiting for that price condition to be met, even if it takes several days or weeks.

Managing GTC Order Duration and Status

While “Good-Till-Canceled” implies indefinite duration, most brokerage firms implement a maximum time limit for these orders. This limit typically ranges from 30 to 180 days. If a GTC order is not filled within this timeframe, it automatically expires. Brokerages often notify investors when a GTC order is nearing its expiration, allowing re-entry if desired.

Investors control their active GTC orders and can manage them as market conditions or strategies evolve. This includes modifying an order’s price or quantity. To adjust a GTC order, an investor cancels the original and places a new one with updated parameters. Investors can also cancel a GTC order at any time before it is executed.

Market Events and GTC Orders

Specific market events, particularly corporate actions, can significantly impact active Good-Till-Canceled orders. Corporate actions such as stock splits, reverse stock splits, or large dividend payments often necessitate adjustments to existing GTC orders. For example, in the event of a 2-for-1 stock split, a GTC buy order for 100 shares at $50 might be automatically adjusted by the brokerage to 200 shares at $25 to reflect the new share structure and maintain the original total value of the order. Similarly, a reverse stock split would lead to a proportional decrease in shares and an increase in the order price.

Significant cash dividend payments, especially large special dividends, can also lead to adjustments in the price of GTC limit orders. Brokerage firms typically adjust these orders to ensure the investor’s intent regarding the pre-dividend value of the security is maintained. It is important for investors to monitor their active GTC orders during periods of market volatility or when corporate actions are announced for the securities they hold or intend to trade. This proactive monitoring helps ensure that the order still aligns with their intentions and financial objectives following such events.