Time-in-Force Instructions
Time-in-force instructions control how long your trade order stays active in the market. These instructions determine whether your order expires at the end of the trading day, remains active until canceled, or must execute immediately. Understanding time-in-force options helps you manage your trades more effectively and avoid unexpected outcomes.
Different time-in-force instructions serve different trading strategies. An aggressive trader seeking immediate execution uses different instructions than a patient investor willing to wait days for the right price. Knowing when to use each option can improve your execution prices and reduce trading frustration.
What Are Time-in-Force Instructions?
When you place an order to buy or sell a security, you specify not just the price and quantity, but also how long the order should remain active. Time-in-force (TIF) instructions tell your broker and the exchange when your order expires if it doesn't execute immediately.
Think of it like sending a letter with different delivery requirements. You might send a package that must be delivered immediately, one that can wait up to a week, or one that should be held until the recipient is available. Time-in-force instructions work similarly for your trades, giving you control over order timing and execution.
These instructions become particularly important when using limit orders or stop orders that may not execute immediately. Without specifying a time-in-force, your order follows your broker's default setting, which might not match your intentions.
Common Types of Time-in-Force Instructions
Several standard time-in-force options exist across most brokerages and exchanges, each designed for specific trading scenarios.
Day Order
A Day order is the most common time-in-force instruction and usually the default at most brokerages. Your order remains active only until the market closes on the day you placed it.
If you place a limit order to buy a stock at $50, and the stock never reaches $50 during that trading day, your order cancels automatically at market close. The next day, if you still want to buy at $50, you must place a new order.
Best Used For: Most routine trades where you're actively monitoring the market and can place a new order the next day if needed. Day orders prevent you from forgetting about old orders that might execute unexpectedly days later at outdated prices.
Good-Til-Canceled (GTC)
A stays in the market until either it executes or you manually cancel it. Despite the name, most brokers automatically cancel GTC orders after 30, 60, or 90 days, depending on their policies.
If you place a GTC limit order to buy a stock at $45 when it's currently trading at $50, that order stays active day after day. If the stock drops to $45 two weeks later, your order executes automatically even if you're on vacation.
Best Used For: Patient traders who want to capture a specific price point and are willing to wait days or weeks. GTC orders work well when you have a target entry or exit price and don't want to place the same order repeatedly each day.
Important Note: You must remember to cancel GTC orders when your intentions change. An old GTC order might execute unexpectedly if market conditions trigger it weeks after you've forgotten about it.
Immediate-or-Cancel (IOC)
An attempts to execute immediately at the best available price. Any portion of the order that can't fill immediately cancels automatically.
If you place an IOC order to buy 1,000 shares but only 600 shares are available at your specified price, you receive 600 shares and the remaining 400 are canceled. You don't have to worry about the rest of your order filling later at a worse price.
Best Used For: Large institutional traders and sophisticated retail traders who want to test market liquidity without leaving an order exposed. IOC helps prevent market impact from large orders and gives you immediate feedback on available liquidity.
Fill-or-Kill (FOK)
A must execute completely and immediately, or it cancels with no execution at all. Unlike IOC, which accepts partial fills, FOK is all-or-nothing.
If you place a FOK order for 1,000 shares and only 600 shares are available, your entire order cancels. You receive either all 1,000 shares or nothing—no partial fills.
Best Used For: Traders who need complete fills for specific strategies where partial execution creates problems. For example, if you're executing a complex multi-leg options strategy, you need all pieces to fill together or you don't want any of them.
At-the-Opening (OPG) and At-the-Close (CLS)
execute only during the opening auction when the market first opens. execute only during the closing auction at the end of the trading day.
These specialized orders participate in the opening or closing cross, where brokers match large volumes of buy and sell orders to determine the opening or closing price. They don't execute if you miss the specific auction window.
Best Used For: Investors who want to capture the opening or closing price specifically, often for indexing strategies or to reduce market impact on large orders. The opening and closing auctions typically have the most liquidity of the day.
How to Choose the Right Time-in-Force
Selecting the appropriate time-in-force depends on your trading strategy, time horizon, and how actively you monitor your positions.
Active Traders who monitor the market throughout the day typically use day orders. These orders prevent confusion and ensure you're always aware of your active orders. If a day order doesn't execute, you can reassess the next day and decide whether to place a new order at the same or different price.
Patient Investors seeking specific entry or exit prices over longer periods benefit from GTC orders. If you want to buy a stock only if it drops 20% below its current price, a GTC order lets you set it and wait without daily maintenance. Remember to review and potentially cancel old GTC orders periodically.
Institutional Traders and those executing large orders often use IOC or FOK orders to test liquidity and prevent market impact. These orders give immediate feedback about available volume at specific price levels without leaving large orders exposed to the market.
Index Funds and Large Institutional Orders frequently use at-the-opening or at-the-close orders to capture benchmark prices or reduce market impact by participating in the highest-liquidity moments of the trading day.
Time-in-Force and Order Types
Time-in-force instructions work in combination with different order types, and understanding these combinations helps you execute your intended strategy.
Market Orders with day time-in-force typically execute immediately since market orders accept any price. The time-in-force matters less here since immediate execution is expected. Most brokers don't offer GTC for market orders since the purpose of a market order is immediate execution.
Limit Orders frequently combine with various time-in-force instructions. A limit order with GTC time-in-force stays active until it executes at your price or you cancel it. A limit order with day time-in-force expires if your price isn't reached by market close.
Stop Orders and stop-limit orders commonly use GTC time-in-force since you're setting protective levels that should remain active until triggered. A stop-loss set 10% below your purchase price should remain active indefinitely, not expire at the end of the day.
Common Mistakes to Avoid
Understanding potential pitfalls helps you use time-in-force instructions effectively.
Forgetting Active GTC Orders is the most common mistake. Traders place a GTC order, forget about it, and are surprised when it executes weeks later at a price that's no longer attractive. Review your open orders regularly, especially GTC orders.
Using Day Orders for Long-Term Strategies creates unnecessary maintenance. If you're waiting for a stock to drop 30% before buying, use GTC rather than placing the same day order every morning. This reduces order placement errors and saves time.
Not Specifying Time-in-Force leaves your broker to use its default, which varies by firm. Some brokers default to day orders, others to GTC. Explicitly specifying your intention eliminates confusion and ensures your orders behave as expected.
Using GTC Without Price Monitoring can result in executions at once-attractive prices that no longer make sense. A GTC order placed when a stock was $100 might execute at $80 two months later, but perhaps the company's fundamentals have deteriorated and $80 is no longer a good price.
Key Takeaways
Time-in-force instructions give you precise control over how long your orders remain active in the market. Day orders work well for active traders who monitor positions regularly, while GTC orders suit patient investors willing to wait for specific prices.
Match your time-in-force to your trading strategy and availability. If you're actively watching the market, day orders prevent confusion from old orders. If you're a passive investor with specific price targets, GTC orders eliminate the need to place the same order repeatedly.
Review your open orders regularly, especially GTC orders that remain active for weeks. Market conditions change, and an order placed weeks ago might no longer align with your current analysis or goals. Most brokers provide an "open orders" view where you can review and cancel any active orders.
Explicitly specify your time-in-force preference rather than relying on your broker's defaults. This ensures your orders behave exactly as you intend and prevents unexpected executions from unclear instructions.