Spread Betting Orders: Good Till Cancelled
Spread betting positions are opened on the assumption that they will remain open until such times as they are closed, or at such point as the market closes up for the day’s trade. In the same way that market on close orders allow traders to stipulate an end to their positions at the closing bell, good till cancelled orders (GTC) enable traders to cement positions more rigidly with their brokers, guarding against premature closing and ensuring that a position will remain held until such times as the trader decides it no long makes economic sense to do so.
GTC orders are fairly simple to understand in concept, and they provide traders with the means to automatically sure-up their open positions. This is vital in guarding against risk exposure and ensuring profitable positions can be maximised to their fullest extent – a critical part of ensuring an aggregate trading profit across a wider portfolio. While GTC orders can do nothing to interpret or respond to the movements of the market, they do nonetheless play an extremely important role in allowing traders to guarantee their exposure to a market for as long as they desire, factoring in the natural breaks in positions at the end of each trading day.
How 'Good Till Cancelled' Orders Work
Good till cancelled orders are applied to positions that traders want to hold indefinitely – that is, positions that they especially don’t want to be valid for only one trading day. A good till cancelled order means that a position will with certainty run on and on until the trader actively cancels the position. While this might be beneficial in enabling longer-term profitable positions to run and run, it’s essential that traders understand the additional costs and risks they are absorbing by doing so.
Indeed, not only do overnight positions attract additional costs and risks, but also the sheer virtue of GTC orders holding permanent positions means that traders must remember to close their positions eventually, or risk racking up massive losses as a result of a simple error. For this reason, it is arguably best to implement GTC orders alongside other orders and triggers, to offer the best degree of protection for your positions.
When To Use 'Good Till Cancelled' Orders
Good Till Cancelled orders are best implemented in positions that you think will run upwards over a slightly longer time period. Spread betting in essence is a short term trading style, with financial disincentives to hold positions overnight, including additional finance charges. However, where the economics of the trade make sense, a GTC order can be a good way to ensure your position remains open for as long as it needs to, and that your leveraged earnings can continue to grow over the lifetime of the position, and it may well be the case that you forecast a more significant growth in a market over a period of a couple of days or more which would necessitate a GTC order to allow the position to fully run its course.
While the practical implications of different orders might take a bit of getting used to, its guaranteed that with exposure to the markets and real trading experience, you will better understand how these work and the situations in which they can best be of use. There are an array of different order types accessible to spread betting traders – the trick lies in understanding and interpreting which order (if any) is most applicable to a given trading decision.