Time in Force

Time in force refers to the amount of time an order will stay active before it is executed by the broker or expires. Using time in force allows active traders to be specific about timing when placing orders for buying and selling securities.

Time in force orders allows traders to execute trades only when the time is right by setting time limits. Investors can have the peace of mind that even if they forget or are busy with something else, they won’t miss out on buying or selling opportunities because the trade is scheduled to occur.

Unplanned trade execution can be very expensive for buyers. Financial markets are often going through volatile conditions, selling, and buying securities at the right time is crucial to remain profitable.

Some examples of time in force are immediate-or-cancel, limit order, or day order.

Types of Time in Force Orders

There are five common types of time in force orders that make trading convenient and profitable for traders. Here is what each time in force order does:

Day-only order (DAY) 

Day-only-order is an order to either buy or sell the security if certain conditions are met within one trading day. If the trade is not executed by the end of the trading day, the order is canceled automatically. This type of time in force order is useful for day trade when traders want to buy or sell a security within one trading day, if the trade does not take place, the order is canceled. So that the trader can place a new order on the next trading day according to the changing market conditions.

Immediate or cancel order (IOC) 

The immediate or cancel orders are just like FOK but the only difference is that if the entire order is not executable, the executable part is executed and the other part gets canceled. For instance, if the order is for buying 100 shares and 50 shares are available, 50 shares will be bought, and the rest of the order will be canceled.

Fill or kill order (FOK) 

A fill or kill order lets the trader achieve two outcomes: to execute the order or cancel it right away. Fill or kill orders are used by active traders to trade efficiently at higher volumes. The trader can place fill or kill order to either buy or sell the security or cancel the trade order altogether.

Good until canceled order (GTC) 

A good until canceled order lets the trader place an order with the broker to buy or sell securities until the trader or investor cancels it. These orders are usually active for 30 to 90 days or until the investor cancel its execution. Investors who want to hold the trade until they get the specific price can use GTC to hit their target price.

Good until date order (GTD) 

A good until date order is executable on specified date only. If the order fails to be executed on that day, it expires. A GTD order allows traders to have the peace of mind that their orders can only be executed on the specified trading day.