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viernes, 26 de septiembre de 2014

What is a good till canceled order (GTC)?

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A good till canceled order(GTC) is an order to buy or sell a security at a specific price that lasts until the order is completed or is canceled. A GTC order will not be executed until the price reaches the value. Investors often use GTC orders to put a limit price that is far from the current market price. Some brokers may limit the time of a GTC order and may charge more fees to run this type of order.

For example, if a stock is trading at $15, but  you want to buy when the price drops to $12, you can place your good till canceled order as a limit order.  Once the price arrive to the level $12 , the stock is purchased by the order. Good till canceles orders ares different from day orders, which are canceled at the end of the day.

In most cases, GTC orders are canceled by the broker 30-90 days from the date the order is place, so it is advisable to ascertain the trading terms of the broker/dealer. Such orders are used when the order is placed in a price level which is remote from the current market price (can be taken as a type of pending order).

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