Order validity
Family II · Orders
Not to be confused with order type limit, order expiry, order modification.
Order validity defines the lifespan of an order after it is submitted to a trading venue. It is distinct from the order's price or quantity conditions, and is typically expressed through a time-in-force instruction such as day, good-till-cancelled, or immediate-or-cancel. If the validity condition is not met, the order is automatically cancelled or expires without execution.
Common validity instructions
Validity is usually set by a time-in-force parameter. Common values include:
- Day: the order remains active only for the current trading session and is cancelled at the close if unfilled.
- Good-till-cancelled (GTC): the order stays active across sessions until it is filled or explicitly cancelled by the trader.
- Immediate-or-cancel (IOC): the order must be executed immediately, either fully or partially, and any unfilled portion is cancelled at once.
- Fill-or-kill (FOK): the order must be filled in its entirety immediately, or it is cancelled without any execution.
- Good-till-date (GTD): the order remains active until a specified date and time, after which it expires.
The exact set of available instructions and their handling can vary by broker, exchange, and asset class.
Worked example: day order versus GTC
Suppose a trader places a limit order to buy 100 shares at $50.00. The order validity determines what happens if the market does not reach that price during the session.
Validity and order management
Validity interacts with other order attributes. For example, a limit order with day validity may be partially filled during the session; the unfilled remainder is cancelled at the close. A GTC order that is partially filled remains active for the unfilled quantity until cancelled. Traders should also be aware that some brokers apply an expiry to GTC orders after a certain period, such as 30 or 90 days, which is a matter of broker policy rather than a universal rule.
Often confused with
- order type limit
- An order type limit defines the price condition (buy at or below, sell at or above), whereas order validity defines the time condition; the visible sign is that order type limit is about price, while order validity is about duration.
- order expiry
- Order expiry is the specific moment or condition at which an order ceases to be active, while order validity is the broader attribute that determines whether and when expiry occurs; the visible sign is that order expiry is a point in time, whereas order validity is a rule or instruction.
- order modification
- Order modification is the act of changing an existing order's parameters, such as price or quantity, while order validity is one of those parameters that may be modified; the visible sign is that order modification is an action, while order validity is a setting.