You might have heard about GTC orders in the stock market. Good till cancelled (GTC) orders are valid till it is cancelled. These types of orders are basically used to place long term stop-loss and target order in a trading platform.
In India, our stock exchanges do not support GTC orders.
In India, all the pending orders will be cancelled at the end of the trading session. The trader or the stockbroker is required to re-enter those cancelled orders if they want it back.
Due to this reason, stock brokers in India have developed alternatives to GTC. Which is known as Good Till Triggered (GTT).
In this article, we will be discussing how Good Till Triggered (GTT) orders work in the stock market.
What is Good Till Triggered (GTT) Order
Good Till Triggered (GTT) is a feature which allows you to Buy or Sell any financial securities from the stock exchange at your desired price with 1 year order expiry date.
The GTT feature allows you to place a limit order, at the limit price selected by you (the order price) and a trigger price. When the condition for trigger price is met the order gets released to exchange for execution at the order price.
When GTT order can be cancelled
In the following cases a Good Till Triggered (GTT) order can be cancelled;
- When the order is triggered but the order price is not exactly met. In this case, all such orders will be automatically cancelled and removed from the GTT queue at the end of trading session the same day.
- All GTT orders that do not meet the trigger price in 365 days shall be cancelled. 365 days shall be counted as consecutive calendar days from the date of placing the orders.
- In case cash balance, holdings or margin are insufficient at any point in time, pending GTT orders will be cancelled and new GTT orders will be rejected.
- In case you have not furnished a PoA or the PoA is invalid/inactive, or in case of T-PIN, its validity has expired, a GTT order for sale of securities held in your Demat Account will be cancelled.
All GTT orders triggered and sent to the Exchange, if not executed for any other reasons the same day, will also be automatically cancelled. You will need to place the same Good Till Triggered (GTT) orders again.
You have the option of cancelling the Good Till Triggered (GTT) orders at any time before execution, without furnishing any reason.
Margin requirement for GTT orders
If the requisite margin is not available upfront in your account, GTT orders will not be sent by the broker to the exchange even if the trigger price is met.
Therefore, you need to make sure you have sufficient funds in your account in order to execute the transaction.
This means, against all Good Till Triggered (GTT) orders pending to be triggered, you are required to maintain sufficient cash balance and/or sufficient quantity of holdings of the respective scrip and/or margin such that the GTT orders are placed for execution if and when the trigger price is reached or breached.
In case multiple Good Till Triggered (GTT) orders are pending, your broker will decide, at its sole discretion, which of the GTT orders are to be cancelled such that remaining GTT orders may remain active for execution to the extent of available cash, holdings or margin.
Non-POA cases for GTT order
Special attention should be given to non-POA accounts.
If you place a Good Till Triggered (GTT) order to sell securities held in Demat account, then you should have either furnished a PoA in favour of your broker, or you need to authorise the delivery using TPIN and OTP.
The validity of authorization through TPIN is only 90 days. TPIN is not required if you have submitted a valid PoA.
In the absence of PoA or if the PoA is invalid/inactive, or in case of T-PIN, if its validity has expired, then your sell GTT order will be cancelled.
Example: How Good Till Triggered (GTT) order works
For example, let’s assume that XYZ company limited’s stock is trading at Rs. 1350. You placed a GTT buy order with trigger price as Rs. 1355 and limit price as Rs. 1360.
In this case, when the stock’s price reaches Rs. 1355 on the stock exchange, a limit buy order will be placed at Rs. 1360.
As the limit price mentioned in the buy order is greater than the market price, the order will be executed at the market price of Rs. 1355. Your order will not be filled above Rs. 1360 since it’s a limit order.
Your limit price should be greater than the trigger price to place the order. This will ensure that the order is executed when triggered and doesn’t stay pending and get cancelled.
Sell Good Till Triggered (GTT) order is used to exit a current stock holding. Similar to a buy GTT order, you can place a limit order with trigger price and limit price to execute a sell GTT order.
Some brokers allow you to place both stop-loss and target price together in one order. This is a good feature as you can place one order which if triggered cancel the other order. This means if you have placed a GTT sell order for XYZ company limited at a target trigger and entry price of Rs. 900 and stop loss trigger and entry price of 800, then with the current price of Rs. 885, your sell GTT order will be triggered only when price reaches 800 or 900 on the stock exchange.
Assume for a moment the price reached Rs. 900, your GTT sell order gets triggered at Rs. 900. The other order of Rs. 800 automatically gets cancelled.
Remember, this type of order will be executed if you have the stock in your Demat account and a buyer is available.
Many brokers have limitations on the number of GTT orders and they have their own terms and conditions for it. You need to contact your broker to understand those terms and conditions before using this facility.
In addition to the disclaimer below, please note, this article is not intended to provide investing or trading advice. Trading in the stock market and in other securities entails varying degrees of risk, and can result in loss of capital. Most investors and traders lose money. Readers seeking to engage in trading and/or investing should seek out extensive education on the topic and help of professional