Good Till Cancelled (GTC) is a trading order type that remains active in the market until the trader decides to cancel it.
This type of order is useful for traders who want to maintain an open order for an extended period without having to constantly monitor and adjust their trading strategy.
Let’s explore the concept of Good Till Cancelled orders, their functionality, and the advantages and disadvantages of using them in your trading strategy.
What is a Good Till Cancelled Order?
A Good Till Cancelled Order, or GTC Order, is a type of trading order that remains active in the market until the trader cancels it manually or it is filled.
GTC orders can be used with various types of orders, such as limit orders and stop orders, allowing traders to execute their trading strategy over a longer time frame without having to constantly monitor the market.
How Good Till Cancelled Orders Work
When placing a GTC Order, a trader specifies the type of order they wish to place (e.g., a limit or stop order) and the price level or conditions at which the order should be executed.
Once the order is placed, it remains active in the market until either the specified conditions are met and the order is filled, or the trader cancels the order manually.
Benefits of Good Till Cancelled Orders
- Time Efficiency: GTC Orders allow traders to maintain an open order for an extended period without having to constantly monitor and adjust their trading strategy. This can save time and reduce the stress associated with active trading.
- Flexibility: GTC Orders can be used with various types of orders, providing traders with the flexibility to execute their trading strategy over a longer time frame and adapt to changing market conditions.
- Discipline: By using GTC Orders, traders can maintain a consistent trading strategy and avoid impulsive decisions based on short-term market fluctuations.
Drawbacks of Good Till Cancelled Orders
- Forgetfulness: Since GTC Orders remain active until they are manually cancelled, there is a risk that traders may forget about their open orders, potentially leading to unexpected executions and losses.
- Market Changes: Market conditions can change significantly over time, making a GTC Order less relevant or potentially disadvantageous. Traders should regularly review their open GTC Orders to ensure they remain in line with their current trading strategy.
- Broker Policies: Some brokers may have specific policies regarding the duration of GTC Orders, which could limit their usefulness for certain trading strategies or require traders to periodically resubmit their orders.
Summary
In summary, Good Till Cancelled Orders provide traders with a time-efficient and flexible tool for executing their trading strategies over an extended period.
By remaining active until manually cancelled or filled, GTC Orders can help traders save time, maintain discipline, and adapt to changing market conditions.
However, there are some potential drawbacks to using GTC Orders, including the risk of forgetfulness, the need to regularly review open orders, and potential limitations imposed by broker policies.
To mitigate these risks, you should carefully consider your trading strategy, market conditions, and broker policies before using GTC Orders, and should regularly monitor your open orders to ensure they remain aligned with your current trading objectives.