Recently, many novice traders are not very familiar with GTC orders. In fact, this tool is really useful for medium- and long-term traders.

Simply put, a GTC order is when you tell the exchange: buy or sell at a specific price for me, without rushing, and it will execute when the price reaches that level. Unlike a day order for intraday trading, which expires at market close, a GTC order can remain active for several days or even weeks.

I often use it this way: suppose a stock is currently trading at $55, and I think it's a bit expensive, but if it drops to $50, I want to buy. Instead of watching the market all day, I place a GTC buy order at $50. If the stock price really drops, the order will automatically execute, and I don't have to do anything. Selling works on the same logic: for example, I hold a stock currently at $80, and I set a GTC sell order at $90, so as soon as the price goes up, I can automatically lock in profits.

But this convenience also comes with a cost. The biggest risk is market volatility. A GTC order might be executed unexpectedly due to sudden price swings or overnight gaps. For example, if a stock closed at $60 the previous day, but due to some news, it gaps down to $50 the next day, your $58 sell order might be filled at a price far below your expectation. Also, you might forget about this order. Most brokers will automatically cancel unfilled GTC orders after 30 to 90 days, but if market conditions have changed completely, your trading strategy might no longer be suitable.

Regarding the difference between GTC orders and day orders, day orders are more suitable for traders seeking short-term volatility, as they limit your risk exposure within a single trading day. But if you want to wait for a stock to reach a certain price over the next few weeks, a GTC order is a better choice, as it can automate the entire process and save you from constantly watching the screen.

My advice is, if you use GTC orders, it's best to check your unfilled orders regularly to ensure they still align with your current trading logic. Markets change, and your strategy should adapt accordingly. This way, you can enjoy the convenience of GTC orders while avoiding the risk of forgotten orders executing at an inappropriate time.