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Day Order

A type of trading order that an investor gives to his or her broker – a directive that the broker will buy and/or sell certain assets (such as stocks)

What is a Day Order?

A day order is a type of trading order that an investor gives to his or her broker – a directive that the broker will buy and/or sell certain assets (such as stocks). The caveat is that the order is only good for, or can only be executed up until the end of, the current trading day.

 

Day Order

 

The order is to be filled if/when the asset reaches the price specified in the order. In the event that the asset does not hit the price specified in the order, the order is then allowed to expire without any further action required.

Day orders are very commonplace with brokers and trading platforms. As a matter of fact, day orders tend to be the default trading method employed because they don’t require much fussing on the part of the trader.

Many trading platforms default to “day order” status when an investor goes to enter an order. If the investor wishes for the order to remain valid beyond the current trading day, then they must actively select a different type of order.

 

Summary

  • A day order is a type of order that allows an investor to dictate when the order can be filled; a day order must be filled by the end of the current trading day – otherwise, it is canceled.
  • There are multiple types of day orders, including Immediate or Cancel Orders, Market Orders (IOC), and some Limit Orders.
  • GTC orders are good until the trader executes or cancels it; IOC orders must be filled immediately or canceled; limit orders dictate that a stock must be bought or sold only if they meet the limit price established by the investor.

 

Types of Stock Market Orders

Day orders are just one of many different types of orders that can be used in trading stocks or other financial assets. The orders vary, specifically when it comes to the length of time the order stays on the market before the order is canceled.

Day orders are only effective for one trading day. If they aren’t executed within the span of the trading day, the order expires.

There are other types of orders, which are categorized and used based on duration – the length of time the orders remain in effect in the market. Some of them are described below:

 

1. Good ‘Til Canceled Orders

A “Good til Canceled” order, otherwise referred to as a GTC order, is exactly as its name suggests – the order is valid until it is either executed or canceled by the trader or their broker. Most brokerage firms put limitations on the length of time that this type of order will remain viable.

 

2. Immediate or Cancel Orders

An “Immediate or Cancel” order is also limited by its duration, which in this case, is very brief. Typically referred to as IOC, an immediate or cancel order must either be filled immediately at the specified price or canceled if such fill is not possible.

 

3. Limit Orders

Limit orders are dictated by price. An investor wishing to execute a limit order wants a stock to either be bought or sold at a specified price or an even better price. So, if it’s a sell limit order, it must be sold at the specified price or higher.

If it’s a buy limit order, it must be bought at the specified limit price or a lower price. For such reasons, it’s not always a guarantee that a limit order will be filled. It must reach the limit price to be executed.

A limit order may be placed as a day order, a good ’til canceled order, or an IOC order.

 

4. Market Orders

A market order is an order to buy or sell an asset immediately at the best available market price. Since a market order is always filled immediately, it can be considered as a type of day order.

 

More Resources

CFI offers the Certified Banking & Credit Analyst (CBCA)™ certification program for those looking to take their careers to the next level. To keep learning and developing your knowledge base, please explore the additional relevant resources below:

  • Day Trading
  • Trade Order Timing – Trading
  • Stock Warrants
  • Position Trader

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