#MoneyMonday: Good ‘til Cancelled

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AURRA KAWANZARUWA

Zimbabwe has seen a significant shift in its FinTech sector with mobile banking leading the way and the recent addition of an e-trading platform that uses USSD as well.

This means the average Zimbabwean is now equipped with tools to explore the world of investing and financial freedom.

In this #MoneyMonday series we demystify investing on the stock exchange and the terms that come with it. Today’s term is “Good ‘til Cancelled”.

Good ’til Canceled, or GTC, is used to refer to an order to buy or sell a stock at a set price that remains in effect until the investor cancels the order or the trade is completed.

When an investor places an order for a trade, he can specify that the order should remain in effect until a specific condition is met.  For example, if the investor has a stock priced at $10 per share, but he wants to sell if the stock moves to $15, then the GTC order will stand until that condition is met, unless the investor intervenes and cancels the instruction.  If the stock reaches $15 per share, under the GTC order, the shares will be sold.

Without a GTC instruction on an order, the order will expire at the end of the same trading day.  With a GTC instruction, a brokerage house will hold the order for an extended period of time, usually not more than 90 days without revisiting and requesting further instructions from the investor.

A GTC order is a good way to manage various securities in a portfolio where daily management or trading is not always possible.  However, even when using GTC orders, investor must closely monitor conditions in the market since standing GTC orders may be executed without input from the investor, particularly when there is an event that sends the stock unexpectedly in one direction or the other.

(Source – Investing Answers)