Good ’til Cancelled Order is one of those terms in Forex trading that can leave beginners scratching their heads.
What does it mean? Why is it important? And how can it make your trading journey easier?
If you’ve ever wondered how traders set orders that don’t expire until they take action, then you are in the right place.
Keep reading to discover everything you need to know about Good ’til Cancelled Order.
In This Post
What Is a Good ’til Cancelled (GTC) Order in Forex?
A Good ’til Cancelled (GTC) order is a type of trade instruction you give to your broker when you want a specific action to happen in the Forex market.
Unlike other order types that may expire if not fulfilled within a specific timeframe, a GTC order stays active indefinitely, until you either cancel it or it gets executed.
In simpler terms, when you place a GTC order, you’re telling your broker:
“Keep this order open and active until the conditions I’ve set are met, or until I cancel it.”
This makes GTC orders very handy in Forex trading, where market conditions can fluctuate rapidly, and opportunities might take some time to materialize.
How Does a GTC Order Work in Forex?
Below is a simple step-by-step explanation:
1. You Define the Order
As a trader, you set the parameters of your GTC order. For example, you might decide to buy EUR/USD if the price drops to 1.0800.
2. The Broker Keeps It Active
Once you place the order, it remains in the broker’s system until one of two things happens:
- The market reaches the price level you set.
- You manually cancel the order.
3. Execution
If the market price matches your specified level, the broker automatically executes the order. If not, it just stays active.
Why Do Forex Traders Use Good ’til Cancelled Orders?
Forex traders often use GTC orders for several reasons:
1. Convenience
It saves you from constantly monitoring the market. You can place a GTC order and let the broker handle the rest.
2. Long-Term Strategy
Forex trading isn’t always about short-term moves. A GTC order is ideal for traders who have a long-term price target in mind.
3. Avoid Missing Opportunities
In Forex, prices can change dramatically, even overnight. A GTC order ensures you don’t miss a good trade if the market suddenly reaches your desired level while you’re away.
Examples of Good ’til Cancelled Orders in Forex
Let’s look at some examples to make it clearer:
1. Buying EUR/USD at a Specific Price
You believe that the EUR/USD pair will be a great buy if it drops to 1.0700, but the current price is 1.0850.
You place a GTC order to buy EUR/USD at 1.0700.
Even if it takes days or weeks for the price to reach this level, your order remains active until the broker executes it or you cancel it.
2. Selling USD/JPY After a Price Increase
Suppose you hold USD/JPY and want to sell it if the price rises to 150.00.
The current price is 148.50, and you think the market might take a while to hit your target.
You place a GTC order to sell at 150.00.
This way, you don’t have to keep checking the market, the order will execute automatically if the price reaches your target.
When Should You Use a GTC Order in Forex?
You should use a GTC Order in Forex When:
1. When You Have a Clear Target
If you’re confident about a specific price level but unsure when the market will reach it, a GTC order is your best option.
2. To Avoid Missing Trades
Forex markets operate 24/5, and you can’t always be online. A GTC order ensures you don’t miss trades during off-hours.
3. For Strategic Planning
Long-term traders or those who use support and resistance levels in their analysis can benefit greatly from GTC orders.
Pros and Cons of Good ’til Cancelled Orders
In as much as GTC has benefits, it also comes with drawbacks, and they are as follows;
Pros
- No Expiration: You don’t have to worry about the order expiring before the market reaches your desired price.
- Automated Execution: The broker executes the trade without your intervention when the market hits your level.
- Time-Saving: It reduces the need to constantly monitor the Forex market.
Cons
- Forgetfulness: If you forget about the order, it might execute when you’re unprepared.
- Market Changes: Forex markets are volatile, and your initial strategy might not hold over time.
Tips for Using GTC Orders in Forex
They are:
1. Set Alerts
Use price alerts to stay informed when your GTC order is close to being executed.
2. Review Regularly
Don’t forget about your orders; check them periodically to ensure they align with your current strategy.
3. Combine with Analysis
Use GTC orders alongside strong technical or fundamental analysis to increase your chances of success.
Conclusion
A Good ’til Cancelled (GTC) order is a tool in Forex trading that gives traders flexibility and control.
It allows you to set specific price levels and leave your orders open until they’re executed or manually cancelled.
Whether you’re a beginner or an experienced trader, understanding how to use GTC orders effectively can save you time, reduce stress, and help you stay ahead in Forex.
Now that you know what a GTC order is and how it works, hope you are ready to start using it in your trading strategy.