What is: Good ‘Til Cancelled (GTC)

What is Good ‘Til Cancelled (GTC)

Good ‘Til Cancelled (GTC) is a type of order used in trading that remains active until it is either executed or cancelled by the trader. This type of order allows traders to set a specific price at which they are willing to buy or sell a security, and the order will remain in effect until the price is reached or the trader decides to cancel it.

How Does Good ‘Til Cancelled (GTC) Work?

When a trader places a Good ‘Til Cancelled (GTC) order, they specify the price at which they want to buy or sell a security, as well as the duration of the order. The order will remain active in the market until it is either executed at the specified price or cancelled by the trader. This type of order is useful for traders who want to set a specific price target and are willing to wait for the market to reach that price.

Benefits of Using Good ‘Til Cancelled (GTC) Orders

One of the main benefits of using Good ‘Til Cancelled (GTC) orders is that they allow traders to set specific price targets and automate their trading strategy. This can help traders take advantage of market opportunities without having to constantly monitor the market. Additionally, GTC orders can help traders avoid emotional decision-making by sticking to their predetermined price targets.

Limitations of Good ‘Til Cancelled (GTC) Orders

While Good ‘Til Cancelled (GTC) orders can be a useful tool for traders, they also have some limitations. One limitation is that GTC orders may not be suitable for fast-moving markets or securities with high volatility. In these situations, the market may quickly move away from the specified price, leading to missed opportunities or unexpected losses.

Examples of Good ‘Til Cancelled (GTC) Orders

An example of a Good ‘Til Cancelled (GTC) order is a trader setting a buy order for a stock at $50. If the stock price reaches $50, the order will be executed, and the trader will purchase the stock at that price. If the price does not reach $50, the order will remain active in the market until the trader decides to cancel it or the price target is reached.

Conclusion

In conclusion, Good ‘Til Cancelled (GTC) orders are a valuable tool for traders looking to set specific price targets and automate their trading strategy. By understanding how GTC orders work and their benefits and limitations, traders can make more informed decisions and improve their trading performance.