GTT Orders: How They Work and Key Features Explained

Good till triggered orders (GTTs) are effective tools that can serve as you for navigating the hectic trading market and making sure you don’t pass up any opportunities. It is one of the many order types that you can place while trading or investing. In this article, let’s take a closer look at GTT orders. 

What are good till triggered orders?

A GTT is an instruction that includes two essential features—conditional activation and extended validity— it is placed with your broker.

• Conditional Activation: A GTT order remains inactive until a specific price point, referred to as the trigger price, is reached. 

• Extended Validity: The GTT order becomes a conventional limit order once it is activated. But GTT orders have longer validity than normal orders, which expire at the end of the day. 

GTT orders types

Now that we have examined the fundamental features of good till triggered (GTT) orders, let us take a closer look at the various types:

1. Single GTT order

The simplest and most direct way is to define a single trigger price and, if desired, a limit price for a single GTT order. Here’s how it functions:

You establish the trigger price. At this critical point, the GTT good till triggered order becomes a buy or sell order, contingent upon your instructions. Depending on your broker, you may also establish a limit price. This price determines, after the trigger is triggered, the lowest acceptable price for a sell order or the maximum acceptable price for a buy order.

Until the market price of the security crosses your chosen trigger price, the GTT order is dormant. The GTT order becomes a conventional limit order and tries to execute at your designated limit price or a more favourable price upon reaching the trigger price.

2. One Cancels Other (OCO)

A more advanced method that makes use of two trigger prices at once is the One Cancels Other (OCO) GTT order. This strategy works well for controlling risk and seizing opportunities:

You provide two trigger prices here:

• A stop-loss trigger: It is a price that functions as a safety net, immediately selling your holding if the price drops below a certain level, thus reducing potential losses.

• A take-profit trigger: Your profit target is represented by this price. The GTT order automatically sells your investment and locks in your winnings if the price hits this level.

Until one of the trigger prices is violated, the GTT order is dormant. A purchase or sell order is placed following the trigger price when it is reached. To prevent you from purchasing and selling the security at the same time, the other trigger price is instantly cancelled.

For swing traders who wish to plan their entry and exit positions ahead of time to protect their capital and maybe profit, OCO GTT orders are very helpful. Your trading strategy can be effectively tailored to your individual goals and risk tolerance by knowing the differences between single and OCO GTT orders.

How to place a GTT order?

The procedure for executing a good till triggered order may differ slightly based on the brokerage platform you choose. But generally speaking, the following are involved in the steps:

1. Getting into the Order Window- Find your brokerage platform’s order placement section. This could be labelled as “New Order,” “Order Entry,” or a similar term.

2. Picking the Level of Security- Select the stock, ETF, or other asset for which you wish to submit a good till triggered. 

3. Determining the GTT Choice- Check the order window for a label that says “GTT,” or “good till triggered.” The platform may include a distinct tab or checkbox for this.

4. Choosing Whether to Purchase or Sell an Order-  Please specify if you would like to make a sale or purchase a GTT order.

5. Establishing the Price of Trigger- Input the trigger price, which is the critical price at which the GTT order converts to a conventional limit order.

6. Optionally Setting the Limit Price- You can set a limit price in addition to the trigger price on certain platforms. Once the trigger is triggered, this determines the lowest acceptable price for a sell order or the maximum acceptable price for a buy order.

7. Order Verification and Approval- Examine your GTT order’s specifics, paying close attention to the quantity, trigger price, limit price (if any), and order type. Upon fulfilment, verify the order placement.

Conclusion

Good till triggered orders are a type of advanced order in trading that allows investors to set specific conditions for buying or selling securities. They provide investors with greater flexibility and control over their trades. By leveraging GTT orders, investors can automate their trading decisions and react to market movements more efficiently. To learn more, subscribe to StockGro blogs.

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