What Is a Good-Till-Cancelled (GTC) Order?

A Good-Till-Cancelled (GTC) order serves as an instruction to a brokerage firm to buy or sell a security at a specified price. This type of order differs from a standard “day order,” which automatically expires if it is not executed by the end of the trading day. A GTC order remains active in the market until it is either fully executed or manually canceled by the investor who placed it. It provides a means for investors to set a desired price for a transaction without needing to re-enter the order each trading session.

Understanding GTC Order Duration

A GTC order’s primary characteristic is its extended lifespan, allowing it to remain active across multiple trading sessions, potentially for days, weeks, or even months. This enduring nature means the order continuously waits for the market price to reach the specified level. The order will be fulfilled automatically if the market price aligns with the order’s set price.

Despite the name, GTC orders are not indefinite. Brokerage firms typically impose a maximum duration for these orders to prevent them from remaining active indefinitely and potentially executing under unforeseen market conditions. This time limit commonly ranges from 30 to 90 days, after which the order will automatically expire if it has not been executed or manually canceled by the investor. Some brokerage policies might extend this period further, sometimes up to 180 days.

An investor can choose to cancel a GTC order at any point before its execution, providing flexibility to adapt to changing strategies or market outlooks. Additionally, certain corporate actions can lead to the automatic cancellation or adjustment of GTC orders. For instance, events like stock splits, mergers, or significant special dividends may cause a brokerage to cancel outstanding GTC orders to avoid unintended executions or to reflect changes in the security’s structure.

Combining GTC with Price-Specific Orders

The “Good-Till-Cancelled” instruction defines how long an order remains active, rather than dictating the price at which a trade occurs. It functions as a “time-in-force” directive, meaning it specifies the duration for other, more specific order types. GTC is frequently paired with price-specific orders such as limit orders and stop orders.

A limit order, when combined with a GTC instruction, allows an investor to specify the maximum price they are willing to pay when buying or the minimum price they are willing to accept when selling. For example, an investor might place a GTC buy limit order for a stock below its current trading price, anticipating a future dip. This order will remain active for an extended period, executing only if the stock price falls to or below the set limit.

Similarly, a GTC instruction can be applied to a stop order. A stop order is designed to limit potential losses or protect profits by triggering a market order or a limit order once a specific price, known as the stop price, is reached. For instance, an investor holding a stock might place a GTC sell stop order below the current market price. If the stock price declines to the stop price, the order activates, aiming to sell the shares. These combinations allow investors to set automated trading parameters that persist over time without constant daily monitoring.

Practical Considerations for GTC Orders

While GTC orders offer convenience by automating trade execution, they require diligent monitoring. Market conditions can evolve significantly over days or weeks, potentially rendering an initially desirable price target unfavorable. Forgetting about an active GTC order could lead to an unexpected execution that no longer aligns with an investor’s current strategy. Investors should consult their specific brokerage’s terms to understand the maximum duration limits and any renewal options for GTC orders. Being aware of potential adjustments or cancellations due to corporate actions, such as stock splits or dividends, is important to manage one’s portfolio effectively.