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GTT Orders - What is Good Till Triggered Feature

4 Mins 27 May 2024 0 COMMENT
GTT Orders

Let us say you want to buy a share at Rs 100. The current price is Rs 120. What are the options with you to go about it? One of the options is to monitor the share price every day, and when the price reaches Rs 100 - you place the buy order. But that would be too much of an effort, right? The desired price could hit in a few days or may take weeks.

For such a buy-and-sell scenario, we have something called GTT. If you want to know more about it, go through all the sections of this article.

What is a GTT order?

A GTT (Good-Til-Triggered) order is a type of order that remains active until a specific condition is met or until the order is canceled manually or expires. This type of order is helpful for you if you want to set predefined conditions for buying or selling a stock without constantly monitoring the market.

Examples of GTT Order:

Let us take an example to understand it better. Jai owns shares of a company, XYZ Ltd, currently trading at Rs 100 per share. Jai believes that if the price of XYZ Ltd reaches Rs 110, it might fall then. Hence, he wants to lock in his profits at this level. Here is how he can use a GTT order:

  • Setting the Condition: Jai sets a GTT sell order with a condition that it should trigger if the price of XYZ Ltd reaches Rs 110.
  • Order Type: He chooses to place a limit order with a sell limit price of Rs 110.
  • Monitoring: Jai doesn't need to watch the market continuously. The GTT order remains active in his brokerage account.

If XYZ's stock price hits Rs 110, the GTT order is triggered, and his shares are sold at Rs 110. If the price never reaches Rs 110, the order remains pending indefinitely (or may cancel after certain days - it depends on your broker) until Jai cancels it.

Types of GTT Orders

Here are four different categories of GTT Order options you may see. Some brokers may give you more options:

Limit Buy Order:

A limit buy order is placed to purchase a stock at or below a specific price. If you want to buy shares of ABC Ltd currently trading at Rs 100, you can set a GTT limit buy order at Rs 95. The order will execute if the stock price drops to Rs 95 or lower.

Stop-Loss Buy Order:

A stop-loss buy order is set to purchase a stock once it reaches a certain higher price, typically used to enter a position in a stock that is breaking out of a resistance level. If you believe ABC Ltd. will continue to rise once it surpasses Rs 105, you can set a GTT stop-loss buy order at Rs 105. The order will trigger and buy the stock if the price reaches Rs 105.

Limit Sell Order:

A limit sell order is placed to sell a stock at or above a specific price. If you own shares of ABC Ltd. bought at Rs 90 and want to sell them at Rs 110, you can set a GTT limit sell order at Rs 110. The order gets executed if the stock price rises to Rs 110 or higher.

Stop-Loss Sell Order:

A stop-loss sell order is set to sell a stock once it drops to a specific lower price, typically used to limit losses. To protect your investment in ABC Ltd and minimize losses, you can set a GTT stop-loss sell order at Rs 85. The order will trigger and sell the stock if the price drops to Rs 85.

Benefits of Using the GTT Order Feature

If you have understood the GTT feature, the benefits should not surprise you. Here are some of the benefits of using the GTT order feature:

  • Frees Up Time: Placing a GTT order eliminates the need to constantly monitor the market for your desired entry or exit price. You set the trigger conditions, and the order is automatically submitted once those conditions are met. It lets you focus on other aspects of your trading strategy or daily routine.
  • Reduced Slippage: By pre-determining your entry or exit price, GTT orders can help minimize the risk of slippage. Slippage occurs when the price at which your order is executed deviates from your desired price, potentially impacting your profits.
  • Disciplined Trading: GTT orders can help you maintain discipline by removing emotions from the equation. You set your parameters beforehand, reducing the temptation to make impulsive decisions based on market fluctuations.
  • Long-Term Order Validity: Unlike standard orders that expire at the end of the trading day, GTT orders remain active for a set period (usually up to one year) or until the trigger condition is met. It is particularly useful for long-term trading strategies.

How to use the GTT order feature?

Here is how you can use the GTT order feature:

  • Setting the Condition: You specify a condition, such as a particular price level at which the order should be executed.
  • Order Type: The order can be set as a limit order (executed at a specific price or better) or a market order (executed at the current market price once the condition is met).
  • Duration: Unlike traditional orders that might expire at the end of the trading day, GTT orders stay active until the condition is triggered you cancel the order, or it passes the maximum days. On the ICICIDirect app, if the first two conditions are not met, the GTT order is canceled after a year (365 years).

How can we track GTT orders on ICICI Direct App?

First, we discuss how you can create GTT orders on the ICICI Direct App. The steps are simple and as below:

  • Login to your ICICI Direct Account
  • Go to Stocks, and under it, click 'Place Order' as shown below.
  • Next, click on the GTT and give the required information - Exchange, Action (Buy or Sell), Trigger Type, Stock Name, Quantity, and price as shown below.

Once you have placed your GTT orders, you can track them in the order book section under the Stocks option.

  • So, click on Stocks --> Order Book --> GTT
  • You will see a list of all the GTT orders. To know the status of any GTT order, you can click on the stock name and see the details.

Before you go

A GTT order is a powerful tool for you if you are looking to automate your trading strategies based on specific market conditions. Knowing your orders are in place and will be executed automatically under predefined conditions can provide peace of mind, especially for investors who cannot actively monitor the market throughout the day. Before you leave, ensure that whenever you place GTT orders, you have sufficient funds in your trading account. We hope you will start making use of this feature soon.