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What is 'Good 'Til Canceled - GTC'

A good 'til canceled (GTC) order can be placed by an investor to buy or sell a security at a specified price that remains active until it is either rescinded by the investor or the trade is executed. GTC orders offer an alternative to placing a sequence of day orders, which expire at the end of each trading day. Rather than leave orders open ended, which poses the risk of being forgotten by investors until an eventual execution, GTC orders are commonly set to expire of 30 to 90 days after the trades are entered.

BREAKING DOWN 'Good 'Til Canceled - GTC'

GTC orders provide investors with the convenience of placing trades at specified price points, also referred to as limit orders, which remain in force until they reach an expiration date, are executed or are canceled. These orders can be entered to buy or sell stock, or as stop orders. Limit prices and share amounts can also be changed prior to the execution of the trade.

GTC Buy Orders

An investor seeking to buy shares at a price lower than the trading level at the time the order is placed can enter a GTC buy order. For example, with shares of XYZ Corp. trading at $25, an investor could place an order at $22, as long as the order is for at least 100 shares. If share prices decline to that level, the trade is executed at $22 or lower. Generally speaking, GTC orders are filled at their limit price. One exception is a gap down, in which the stock closes above the limit price but opens below it. In the example above, the limit order would be filled at or near the opening price of the stock after the gap, which could be substantially lower than the limit price.

GTC Sell Orders

Investors can place GTC sell orders above the market price at the time the order is placed. For example, with shares trading at $25, an investor can place an order to sell at $28. If the share price increases to that level, an active sell order would execute at $28 or higher. Like GTC buy orders, sell orders are also executed at prices favoring investors under certain circumstances. For example, a gap opening above $28 would be filled at or near the opening price.

The NYSE Stops GTC Orders

In February 2016, the NYSE and NASDAQ stopped accepting GTC orders, as well as GTC stop orders. Stop orders are usually placed to limit losses with automatic executions when trades are executed at a specified level. For example, with shares trading at $25, an investor could place a stop order at $20, which would be executed when a prior trade is executed at $20. At the execution of a trade at $20, the GTC stop order is converted to a market order which may be sold at, above or below $20. Most brokerages still offer GTC and stop orders, but they cannot be placed directly with the NYSE or NASDAQ.

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