Recently, someone asked me about GTC orders, so I might as well share my understanding. This good till canceled order is still a pretty useful tool for traders, especially when you have a clear target price but don't want to watch the market all day.

Simply put, a GTC order is when you tell your broker: I want to buy or sell at a certain price, and you keep an eye on it for me. When that price appears, it automatically executes. Unlike day orders, which expire at the end of the trading day, GTC orders can exist across multiple trading days, usually lasting 30 to 90 days, depending on your broker's rules.

Let me give an example. Suppose a stock is currently $55, which you think is a bit expensive, but if it drops to $50, it's worth buying. Instead of watching the market every day, you can place a GTC buy order at $50. When the stock price really drops to that level, the order executes automatically. The same logic applies to selling—you hold a stock bought at $80, and want to sell at $90 to lock in profits, so you place a GTC sell order at $90, without constantly monitoring the price.

But this convenience comes with a cost. The biggest risk is sudden price fluctuations that might trigger your order when you don't want it. For example, if a stock jumps from $60 to $50 overnight due to some news, your $58 sell order might execute at $50, which is not what you intended. There's also the risk of forgetting—once the order is placed, if market conditions change, your trading strategy might be outdated, but the order remains waiting to be executed. So, regularly checking and adjusting your open orders is important.

Comparing with day orders makes the difference clear. Day orders are only valid for the day they are placed, suitable for traders aiming to capture short-term volatility. GTC orders are designed for those with long-term target prices who are willing to wait patiently. If you believe a certain price is fair and are willing to wait weeks or even months, GTC orders can automate that process.

Overall, GTC orders are a handy tool that allows you to execute trading strategies without constant monitoring. The key is to be aware of their risks, such as market gaps and unexpected volatility, and to review your orders regularly to ensure they still align with your current trading plan. Only then can you truly leverage the advantages of good till canceled orders.