A “Time in force” (TIF) option exists when placing an order on your trading platform.
This tells the broker how long your order remains active if your order is not executed right away.
Your order may not execute right away if you have a limit order for which your trigger price has not yet been reached.
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The most common options for Time-In-Force are Day and Good-Til-Cancel orders.
Some platforms will also have the GTD option, which stands for “Good Til Date.”
It lets you tell the broker until what date you want your limit order to be active.
Depending on your trading platform, the interface will allow you to type in a date or open a calendar date picker.
The broker will keep your order active until that date (usually at the end of the trading session on that date).
How Are GTD Orders Different From Other Orders?
Day orders remain active for the trading day.
Good-til-cancel (GTC) orders remain active up to the limitation of your broker (for example, up to 180 days).
Good-til-date (GTD) orders remain active until you specify (within the limitation of your broker).
Whereas Day orders expire at the end of the trading session, GTC and GTD orders allow you to carry over your order across days.
You can manually cancel all these types of orders at any time.
What Are Some Use Cases For GTD Orders?
Day orders are the most commonly used and are usually the default choice for the Time-In-Force selection.
Good-Til-Cancel is used on limit orders by many traders.
For the most part, Day and GTC are all that most traders will ever need.
However, GTD orders can be helpful in a few use cases.
A stock investor may want to purchase a stock at a good price using a limit order and want to keep the order open for multiple days.
However, he/she does not want to purchase the stock if it is too close to the earnings announcement for that stock.
Therefore, the investor sets a GTD order to expire just two weeks before the earnings announcement date.
Another example is an options investor who initiates an iron condor with eight weeks till expiration.
He sets a limit order to take profit on the iron condor trade for a calculated profit of 50% of the initial credit received.
However, only if it is within the first half of the condor trade duration.
If, after that, he would rather continue to hold the trade for longer, he applies the GTD condition to the order to cancel this order on a date four weeks before the condor expiration date.
What Are Some Limitations Of GTD Orders?
Depending on your broker, some may not have GTD orders.
Others may limit them to certain markets, such as stock and options, but not allow them for Futures, Options on Futures, etc.
There is a limit on how much time brokers will keep orders active.
They don’t want to have to keep everyone’s orders active for years and years.
Some will have a limit of 180 days as the maximum duration for which you can set your GTD orders.
Even if you specify GTC (Good-Til-Cancel), it does not mean forever.
The broker has the right to expire your GTC order after a certain number of days.
Check with your specific broker.
Are There Other Limitations to GTD Orders that I Should Be Aware Of?
If you are setting a GTD order to buy or sell an option, you can not set the date beyond the expiration date.
This only makes sense because there is no more option for you to sell or buy after the option expiration date.
How Come I Can Not Find The GTD Option In My Trading Platform?
There are so many features and possible options for each feature that there is no room in the trading interface to spell everything out.
That’s why they have used abbreviations like GTC, GTD, and TIL.
After reading this article, you now know what these abbreviations mean.
Typically, the GTD option is hidden inside the droplist of the TIL option, alongside the GTC option.
When you select the GTD option, a calendar option might suddenly appear where it had not been before.
Every trading interface is different; you might need to hunt for it.
Some brokers will not specifically mention a GTD option.
Instead, they will have a GTC option but will allow a date to be specified for the GTC option, which essentially has the same effect as a GTD option.
And then some brokers might not have the Good-Til-Date feature at all.
If that is the case, just use the Good-Til-Cancel option and make a mental note to manually cancel the order on the date that you want the order to be canceled.
Or better yet, just set a reminder in your calendar.
That’s all.
We hope you enjoyed this article on GTD orders.
If you have any questions, please send an email or leave a comment below.
Trade safe!
Disclaimer: The information above is for educational purposes only and should not be treated as investment advice. The strategy presented would not be suitable for investors who are not familiar with exchange traded options. Any readers interested in this strategy should do their own research and seek advice from a licensed financial adviser.
