GTC also known as “good till cancelled” implies that the order remains active unless it is cancelled or its trade gets completed. This type of order is always requested by the investors, the reason being it can be prepared well in advance and parties to it are not required to alter or set it up every day.
Where do GTC orders exist?
The order was stopped by New York Stock Exchange and NASDAQ in 2016, owing to the risks associated with it. The authorities believe that investors should be aware of the risk especially in such highly volatile market conditions. Still in rest of the market one can place GTC and GTC stop orders, but they are strictly banned in NYSE and NASDAQ.
GTC Order definition and all about it
- The name suggests that order runs for an indefinite period of time, however to keep it appropriate broker attaches a limit of 30-90 days to it. This keeps the order active and also prevents the parties from forgetting about it. If in case the order is not completed within the predefined time, then it can be cancelled or extended as per requirement of parties.
- The GTC order is directly related to condition-related orders, i.e. it only gets executed when specified condition is fulfilled or met. Like if an individual is willing to buy financial instrument at a certain price, then the order only gets fulfilled once instrument reaches to a specified price.
How does GTC works?
GTC works by following steps mentioned below;
- GTC order implies to a limit order, i.e. if the order is not executed within the time limit then it gets cancelled or extended as per will of the party. If you have placed a GTC order on March 7, 2014 to buy 100 shares at the price of Rs.820. The time limit to execute the order has been fixed to April 7, 2014 i.e. one month. Hence if during this time, the price of share falls to or below Rs. 820 then purchase would be made and order will be completed. However if the price increases beyond 820 then the order shall be cancelled.
- GTC order can be partly executed and cancelled. In such a situation, the cancelled portion is raised as fresh request as per will and requirement of parties to it. The newly modified order shall remain good until its term expires or order is finally executed.
Why is it beneficial to choose GTC service?
- Investing in stock market is not only about buying the right share but it is also about buying it at the right price. With GTC one gets the chance to invest in right share at an appropriate price.
- With GTC orders you have the chance of placing an order once and forgetting about it. Herein exact validity period can be specified which cannot exceed beyond 365 days.
- GTC enables the party to it to complete the order in stages. If in case some shares are available at required price, proportion of it is executed and balance remains unexecuted till complete order is fulfilled or period expires.
