What Is a GTC Order in the Stock Market? Definition and Example

A GTC order, standing for "Good Till Canceled," is a type of stock market order that remains active until it is either executed or canceled by the investor. Unlike a day order, which expires at the end of the trading day if not filled, a GTC order can stay open for an extended period, typically up to 90 days, although the exact duration can vary between brokerage firms.

Understanding GTC Orders

How GTC Orders Work

1. Placing the Order: When an investor places a GTC order, they decide to buy or sell a stock at a specified price, but the order does not expire at the end of the trading day.

2. Execution: The order will remain active in the system until it is fully executed, matching the specified price, partially filled, or until the investor decides to cancel it.

3. Review and Cancellation: Investors are usually advised to regularly review their open GTC orders since market conditions can change. If an order no longer aligns with the investor's strategy, it should be canceled.

Benefits of GTC Orders

• Flexibility: GTC orders provide flexibility for those who cannot monitor their investments constantly. You can set your target price and not worry about missing the opportunity.
• Strategy Implementation: They are useful for investors who rely on specific price targets for entering or exiting positions.

Considerations

• Market Fluctuations: Prices can change significantly over time. A GTC order set weeks or months ago might not be suitable under new market conditions.
• Overlooked Orders: There's a risk of forgetting about an open GTC order, leading to unintended transactions.
• Brokerage Policies: It’s crucial to understand your brokerage's specific rules regarding GTC orders, including how long they remain active and how they handle corporate actions like dividends, splits, or mergers.

Example of a GTC Order

Let's say you're interested in buying shares of Infosys, which is currently trading at ₹1,500 per share. You believe it’s a good buy at ₹1,400 or lower. Instead of waiting to see if the price drops to your desired level, you place a GTC order to buy at ₹1,400. This order will remain active until:

• Infosys drops to ₹1,400 or lower and your order is executed,
• You cancel the order,
• Or the order expires according to your brokerage's policies.

Conclusion

A GTC order is a powerful tool in the stock market, offering convenience and aiding in strategic investment planning. However, its benefits come with responsibilities—regularly review your GTC orders and stay updated on market conditions to ensure they continue to align with your investment goals. Always consult with a financial advisor or do thorough research to understand the best practices for using GTC orders within your investment strategy.