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How Good Til' Cancelled (GTC) Orders Help Me Manage My Winners

Mar 2, 2015

By: The tastytrade Team

A Brief Story

I woke up late...it was the day after my most recent move. Therefore, it is safe to assume that I was tired and not entirely on my A-Game.

In the haste of the move, I had forgotten that I had placed a couple earnings trades in tech stocks the day before (they were both directional vertical spreads). 

I opened up my trading platform at 10am EST (the market had been open for a half hour already) and noticed that I had 3 orders that had been filled already today. The two vertical spreads for earnings and another trade in $SPY (which had a few weeks left until expiration).

At order entry, I had put in Good ‘Til Canceled (GTC) orders for all of my different spreads because I didn’t know when I would get a chance to get at my computer (GTC orders are one tool I use to help me trade given my super busy schedule). Note: For those of you that are unfamiliar with a good til' cancelled (GTC) order, a GTC order is an order set up by an investor to automate the action of buying/selling a specific underlying at a specific price (I usually set GTC orders to close my positions once they have hit 50% max profit). This order is valid/active until the trade is executed or the investor decides to cancel the order.

All of a sudden I was wide awake and my day was looking up! Putting on the three GTC orders took me about 10 minutes and helped me sleep a little better that night (knowing that I didn't have to wake up with the opening bell to check my positions).

That's just one example of when GTC orders help me manage my winning trades, but they have proven useful on many other occasions as well. I like GTC orders for many reasons, but here are the three main reasons I use them to manage my winning trades.

3 Reasons I Use GTC Orders To Manage My Winning Trades

1. They Help Me Stay Mechanical

By putting in my GTC orders at 50% maximum profit (the upper end of the tastytrade methodology of managing winners), I stay mechanical in my trading.

Sometimes, I get antsy when I look at my positions and make rash decisions when closing orders. When left to my own devices, I found myself getting greedy on some trades. I would have a winning trade on and think to myself - the stock is still going up, I could make 70% profit rather than just 50%.

Using GTC orders makes me remove the emotion from my closing orders. The more I am able to remove emotion (fear and greed) from trading, the more successful I find myself becoming.

2. They Help Me Sleep At Night

I lead a very busy lifestyle and sometimes, I'm not always able to check in on the market or my positions when the market opens. If I'm on the go, GTC orders help me manage my winners without me even having to think twice. They're great for days where I cannot be around a computer/mobile device when the market opens and I had put on earnings trades the previous day.

3. They Give Me More Flexibility When I Travel

Being an avid traveler comes with its fair share of tradeoffs. I try and use GTC orders to make sure that managing my money is not one of them...how? 

I am able to go online once a day to check my account if necessary, but I don’t have to spend hours worrying about my positions. For a traveller like me, this is extremely important. Nothing can impede the journey, not even positions on in $SPY or $QQQ!

GTC Order Words of Wisdom

Just like everything in life, there are some things to be aware of if you choose to use GTC orders to help you stay mechanical. Here are some of my learnings from using GTC orders over the past few months...

  • You have to be careful about putting GTC orders on certain kinds of strategies. If you use the Jade Lizard trading strategy, you are not able to select all three legs and create a closing GTC order. You have to close the call spread separate from the naked put - otherwise, it will show up as an additional order.
  • For credit spreads, you have to subtract the 50% max profit to put in the GTC order.
  • For debit spreads, you have to add the 50% max profit to put in the GTC order.
  • Avoid putting in orders for trades that you are less familiar with.

If you are feeling intimidated by the whole concept of GTC orders, don’t worry. The first time I put on a GTC order, my hands were trembling and my heart went through palpitations (not really, but you get the idea).

The whole time I was worried that I was doing it wrong and the order would go through as a loser. Once I was able to get past the initial fear and actually placed and closed a trade with a GTC order, I became more comfortable with the idea of relying on the computer to close my orders for me.

Before putting in my first GTC order

Before putting in my first GTC order

After my first GTC order success

After my first GTC order success

As you can probably see, GTC orders are useful for people who are have schedules that may not allow them to be at a computer during stock market hours (9:30am-4pm EST) and for people who travel frequently (regardless of wether the travel is for business or pleasure). They are also a great tool to use to help you take your emotion out of trading and keep your style mechanical.

If you would like to give GTC orders a try, put in a GTC order on a simple trade first (i.e. a naked options or vertical spread). This will help you feel get comfortable with the mechanics of placing this type of order.

Best of luck and if you have any questions, leave them in the comments!


Do you use GTC orders? If so, tweet to us at @tastytrade telling us your favorite thing about them suing the hashtag #gtclove


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