At stockbrokers.com we want to help the average investor become well-informed. A well-informed investor is far more likely to make a wise decision when investing that hard earned money. While making money in the market is never an easy proposition, more options and tools from your online broker definitely put you in control. One of the ways that online brokers have helped move investing forward is by offering multiple trade order expiration types. The goal of this article is to explain the most common trade order expiration types. Let’s take a closer look at six trade order expiration types.
Common Trade Order Expiration Types
Good Til Cancelled (GTC) – Good Til Cancelled has quickly become one of the most popular order types. A GTC order is just what it sounds like it is, good until it is cancelled. The only caveat here is that most brokers will cancel the order somewhere between 30-90 days, so you’ll need to make sure you know the rules at your online brokerage. Other popular trade order expiration types that are similar to this one are the Good This Week (GTW) and Good This Month (GTM) order types.
Day Order – Unlike many of the other trade expiration order types on this list, the day order has been around for quite a while. When a day order is entered into the system, if the transaction does not take place by the end of the day it is canceled.
Fill or Kill (FOK) – A Fill or Kill order instructs a broker to fill the entire order immediately or cancel (kill) the order altogether. This trade order type is often used when an investor wants to make a large buy or sell order. With this type of order there should never be a partial transaction. This order type is rarely used, but it can be a nice safety net for active traders making a large transaction.
Market if Touched (MIT)- This is a popular order type with traders. A Market if Touched order is a conditional order that only becomes a market order when a security reaches a specified price. This type of order is similar in nature to a stop order, but the buy and sell actions are inverted. This type of order allows a trader to get the best price possible without being glued to the market all day long.
Limit if Touched (LIT) – This type of order is very similar to a stop limit order. A Limit if Touched order helps traders ensure that an order will not execute at a less favorable price than the specified limit price.
Immediate or Cancel (IOC)- This order is very similar to the Fill or Kill order, but there is one large difference. In an Immediate or Cancel order, a broker is instructed to execute the transaction immediately, but then cancel any portion of the trade that did not occur immediately. This allows for partial fills of a large transaction.
Trade Order Expiration Types Summary:
No investor can watch his or her portfolio all day long, but these trade order expiration types allow you to not be punished for your time away. If you haven’t familiarized yourself with these trade order expiration types in the past, you should definitely do so now. By using these order types, you allow yourself to get the best price available at all times! Virtually all online brokers permit these common trader order expiration types so be sure to use them in your strategy.