Order Specifications
When placing trades in the financial markets, understanding order specifications is essential for executing trades according to your specific preferences and strategies. In this article, we will explain various order specifications, including Time-In-Force, Trigger Methods, and Additions to orders to help you make decisions when trading.
Time-In-Force (TIF)
Time-In-Force refers to the duration or time period for which an order remains active in the market. Different options are available to suit your trading needs:
- DAY (Day Order): A Day Order is active only for the current trading session. If the order is not executed by the end of the trading day, it will be canceled automatically.
- GTC (Good ‘Til Canceled): A Good ‘Til Canceled Order remains active until it is executed or manually canceled by the trader. It remains in the market for an extended period, which could be 30 days or more, depending on the broker’s policy.
- GTD (Good ‘Til Date): A Good ‘Til Date Order is active until a specific date specified by the trader. If the order is not executed by the specified date, it will be canceled.
- DTC (Day ‘Til Canceled): A Day ‘Til Canceled order is similar to a day order, but instead of being canceled and removed from the trading screen at the end of the day, the order is deactivated.
Trigger Methods
Triggers are conditions or events that activate a Stop, Stop Limit, Trailing Stop and Trailing Stop Limit order in the market. Here are the available trigger methods:
- Last: For a buy (sell) order to be triggered, one last price value must be greater than (less than) or equal to the trigger price. The exchange or market center must publish an ask price equal to or higher than and a bid price equal to or lower than the trigger price. Last price must be within the bid/ask or within a leeway percentage outside the bid/ask (0.5% of last). Leeway allows triggering up to 0.5% above the ask price or up to 0.5% below the bid price.
- Double Last: For a buy (sell) order to be triggered, two consecutive last price values must be greater than (less than) or equal to the trigger price, or the last price with an increase in size.
- Bid/Ask: For a buy (sell) order to be triggered, a single bid (ask) price must be greater than (less than) or equal to the trigger price.
- Double Bid/Ask: For a sell order to be triggered, two consecutive ask prices must be less than or equal to the trigger price, or one ask price value must be less than or equal to the trigger price with an increase in size. For a buy order to be triggered, two consecutive bid prices must be greater than or equal to the trigger price, or one bid price value must be greater than or equal to the trigger price with an increase in size.
- Last or Bid/Ask: For a buy (sell) order to be triggered, a single bid (ask) or a single last price must be greater than (less than) or equal to the trigger price.
- Mid-point: For a buy (sell) order to be triggered, the midpoint of the bid/ask must be greater than (less than) or equal to the trigger price.
Default Trigger Methods
Depending on the product you are trading, there will be a default trigger method assigned. Below you can find the default trigger method per product:
- Stocks: The default trigger method for all stocks is the Last method.
- Options: For US options and some USD-denominated options on European exchanges, the default trigger method is the Double Bid/Ask method.
- Forex: For Forex contracts (for example EUR/USD currency pair), the default trigger method is Bid/Ask.
- Structured Products: For all structured products the default trigger method is Last or Bid/Ask.
- Combos: For Combos, the default trigger method is Bid/Ask.
- Commodities: For commodities, the default trigger method is Bid/Ask.
- Other: For all other contracts not specified above, the default trigger method is the Last method.
Order Additions and Order Specifications
- Bracket Order: A Bracket Order consists of three parts – a parent order, a take-profit order (limit order to lock in profits), and a stop-loss order (stop order to limit losses). If the parent order is executed, the take-profit and stop-loss orders are placed automatically.
A Bracket Order allows you to limit your losses in advance and establish your profits. When using a buy order as the parent order, both child orders will automatically be set as sell orders. When your parent order is a sell order, this is the other way around.
Creating a bracket order has the advantage that only one of your two additional orders will be executed, while the other one will be automatically cancelled. - Fill or Kill (FOK): A Fill or Kill Order must be executed immediately and entirely, or it will be cancelled (“killed”). It does not allow partial fills. FOK orders are often used when traders want to ensure that their order is either filled in its entirety or not executed at all, minimizing the risk of partial fills and potential market fluctuations affecting the trade.
- All or None (AON): An All or None Order requires the entire order to be filled in a single trade. If the order cannot be filled completely, it is cancelled. Similar to FOK, AON orders prioritize complete order execution, ensuring that no partial fills occur. However, AON orders differ in that they allow for partial executions as long as the entire order is eventually filled, whereas FOK orders do not allow partial executions.
Both FOK and AON orders are commonly used when traders want to ensure complete order execution, particularly for large positions or when specific price levels are critical to their trading strategy. These order types provide traders with more control over their trades and help avoid unfavorable partial fills or undesirable execution scenarios.
FAQ
Yes, you can change or cancel an order and the order specifications as long as it has not been executed. It is also to change the order type if the order hasn’t been executed yet.
- If you want your order to be active only for the current trading session, select DAY (Day Order).
- For longer-term orders that remain active until executed or canceled manually, choose GTC (Good ‘Til Canceled).
- To set a specific expiration date for your order, use GTD (Good ‘Til Date).
- If you prefer a day order that deactivates instead of canceling at the end of the day, go with DTC (A Day ‘Til Canceled).
Depending on the product you are trading, there is a default trigger method that will activate the order.
You can find more information about these trigger methods here.
Selecting the trigger method is only possible in TWS.
Here you can choose the preferred trigger method in the Order Ticket by going to the Misc. tab and selecting the desired trigger method from the drop down menu as seen below.
When placing an order in TWS without the Order Ticket, you can add the specific trigger method by adding the Trigger Method column to the TWS view. You can do this by right clicking the columns and then clicking Insert Column > Order Attributes > Trigger Method.
After adding this column you will be able to select the trigger method directly in the order line.
- LYNX+
Within LYNX+ it is possible to attach a bracket order when placing an order by selecting “+ Add target or stop loss and specifying at what prices you want these orders to trigger.
- TWS
In TWS you can attach a bracket order to an existing order by right clicking the order, clicking Attach > Bracket Orders. After this, you can specify at what prices these orders will trigger.
- LYNX Trading App
In the LYNX Trading App you can attach a bracket order to the parent order by clicking ATTACH/BRACKET ORDER and after clicking the slider for attaching a Profit Taker and/or Stop Loss. After this, you can specify at what prices these orders will trigger.
GTC orders will generally be cancelled automatically under the following conditions:
- If a corporate action on a security results in a stock split (forward or reverse), exchange for shares, or distribution of shares.
- If the company issues a dividend where the rate exceeds 3% of the prior day’s closing price or if the dividend is an extra/special dividend, regardless of the payment amount.
- If you do not log into your account for 90 days.
- At the end of the calendar quarter following the current quarter. For example, an order placed during the third quarter of 2023 will be canceled at the end of the fourth quarter of 2023. If the last day is a non-trading day, the cancellation will occur at the close of the final trading day of that quarter. For example, if the last day of the quarter is Sunday, the orders will be cancelled on the preceding Friday.
- Orders that are modified will be assigned a new “Auto Expire” date consistent with the end of the calendar quarter following the current quarter.