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Day Order Vs Good Till Canceled Explained - When To Use BOTH - YouTube
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When trading there is two different
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order types.
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One is a day order and
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one is good till cancel.
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What is the difference between
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these two order types, and which
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one should you use when?
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That's what we're going to talk
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about right now.
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When you place an order there's
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five things that your broker
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needs to know.
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Number one: your broker needs to
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know what do you want to trade?
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What stock or option or futures
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or ETF?
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What do you want to trade?
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Number two: your broker needs to
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know, do you want to buy
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or sell it, right?
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So this is step number two that you
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need to define if you want to trade.
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Number three: your broker wants
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to know how many shares,
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or options or ETF
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do you want to trade?
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So the quantity.
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Number four: the broker wants
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to know at what price
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do you want to buy or sell?
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And the fifth element is
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how long should this order
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be valid? Should it be valid
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for the day or GTC,
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which means good till cancel.
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Let me explain to you the
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difference.
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When you place a day order
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it means that this order
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is valid for the trading
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day. So it means that if
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you place it the night before,
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when the markets are closed,
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it means that it is valid for the
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next trading session.
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And the trading session is from
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9:30 in the morning Eastern Time
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to 4:00 in the afternoon.
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Now, one of the following two things
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will happen with the day order.
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Either it gets filled
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throughout the day and again, since
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you are specifying a certain price
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and what you want to get filled it
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might or might not happen.
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When it happens, this order will be
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filled and then you have a position.
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If it is not being filled, so
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if prices never went to
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the level that you specified, the
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order is automatically being
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cancelled at the end of
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the day.
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That is a day order.
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So, when should you use
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a day order?
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For me personally, I use
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a day order when I want to
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enter a position.
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So, doesn't matter whether you want
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to buy a stock, because you are
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betting on a rising market, or you
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want to sell a stock because you are
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betting on a falling market, when
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you enter a position you
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tell your broker for today
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do the following.
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If we get filled, yay, and
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if not, cancel the order.
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The other option that you have is
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specifying that the order is good
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till cancelled, which
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also means GTC.
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What does this mean?
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Here again specifying all these
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five things.
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What you want to trade, whether you
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want to buy or sell, how many
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shares or options you want to trade,
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at what price?
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And then you say, "This
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order stays in the market
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until either I am
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getting filled at the specified
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price that I put in there or
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until I cancel
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the order." The main difference is
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that this order remains in the
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market until it gets filled
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or you decide to cancel it.
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When should you use a GTC
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order? Well, a GTC order
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is perfect for your exit.
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I like to use GTC orders
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for my profit target
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and my stop loss,
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because if I would only use a day
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order it means that at the end of
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the day my stop loss and profit
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target would disappear
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and I have to re-enter it the next
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day. This is why I
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specify my stop loss and profit
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target as GTC because as you
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know I am usually in a trade
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anywhere between 5 and 20
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days and I do not
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want to re-enter the order
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every single day.
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So I want to make sure that either
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the order gets filled or
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I manually hit the cancel
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button to get rid of the order.
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So in summary, you have two
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different types of orders.
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A day order which is only
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valid for one trading
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day and these order types
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are best used for your entries,
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and you have the other option which
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is good till cancelled
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or abbreviated GTC
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and that order type remains
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in the market until it gets filled
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or you're cancelling it
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and that is best used
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for exit orders.
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And exit orders for me are
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stop loss and profit
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target. Hope that helps and
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if it does please make sure that you
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