What Is a Good through/until Date Order?
A good through/until date order is a specific instruction provided to a broker-dealer when placing a trade, indicating that the order should remain active in the market until a specified calendar date, or until it is executed or canceled. This type of instruction falls under the broader category of order types within financial markets, allowing investors and traders to manage the duration of their orders more precisely. Unlike a standard day order, which expires at the end of the trading day, a good through/until date order provides greater flexibility, keeping the order live across multiple trading sessions until the designated expiration date is reached11. This allows an investor to set long-term price targets without needing to re-enter the order daily.
History and Origin
The evolution of order types and their time parameters has closely paralleled the development of modern financial markets and electronic trading systems. Historically, orders were often manual and required frequent re-entry. As markets became more automated and efficient, particularly with the rise of electronic communication networks (ECNs) in the late 20th century, the need for more granular control over order duration became apparent. Regulatory bodies, such as the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA), have continually refined rules governing order handling and disclosure to enhance transparency and investor protection. For instance, the SEC's amendments to rules concerning the disclosure of order execution information, including details about order types and their handling, reflect an ongoing effort to adapt to evolving market structures and technologies9, 10. These regulatory changes, coupled with technological advancements, have facilitated the offering of diverse time-in-force options, including the good through/until date order, providing market participants with more sophisticated tools for managing their trades. FINRA explicitly outlines various time-in-force options, including "Good 'Til Canceled," which often serves as the operational basis for good through/until date orders, allowing them to remain active for extended periods8.
Key Takeaways
- A good through/until date order specifies that a trade remains active until a precise calendar date.
- It offers greater flexibility than a day order, which expires at the close of the trading session.
- This order type allows investors to set long-term price objectives without daily re-entry.
- If the order is not filled by the specified date, it is automatically canceled.
Interpreting the Good through/until Date Order
Interpreting a good through/until date order involves understanding its strategic implications for a trading strategy and risk management. By setting an expiration date, a trader acknowledges that market conditions might not immediately favor their desired price. This order type is particularly useful for those who believe a security will reach a certain price target over a specific timeframe, but not necessarily in the immediate future. It helps prevent "chasing" a price or making impulsive decisions by pre-defining the commitment to a trade. However, it also means accepting the risk that the order might not be filled if the market never reaches the specified price within the given period. The specified date ensures that the order does not remain open indefinitely, reducing the likelihood of unexpected fills long after the initial trading intent has changed.
Hypothetical Example
Consider an investor, Sarah, who wants to buy shares of Company X. The current market price is $50, but Sarah believes the stock is undervalued and would ideally like to acquire it at $48 per share. She anticipates that market volatility or news might push the price down to her desired level within the next month, but not necessarily tomorrow.
Instead of placing a day order for $48 (which would expire at the end of the trading day and require re-entry), or a good 'til canceled order (which could remain active for months and might be forgotten), Sarah places a limit order to buy 100 shares of Company X at $48 with a "good through" date of August 31, 2025.
If, on August 15, 2025, Company X's stock price drops to $47.90, Sarah's order to buy 100 shares at $48 would be executed. However, if the stock price never touches or falls below $48 by the end of trading on August 31, 2025, her order will automatically expire and be canceled. This allows Sarah to manage her trade with a clear time horizon.
Practical Applications
Good through/until date orders are particularly useful in several practical scenarios within investing and trading. They are commonly employed by investors who have a specific price in mind for a security but are not actively monitoring the market every day. For instance, a long-term investor might use this order type to set a buy limit for a stock they wish to accumulate at a lower price, or a sell limit to realize profits at a predetermined higher value, aligning with a long-term investment strategy.
Furthermore, in periods of anticipated market volatility or around significant economic announcements, a good through/until date order can allow a trader to pre-position their desired entry or exit points without being glued to their screen. This can be more efficient than immediate-or-cancel orders or fill-or-kill orders which demand immediate action. Broker-dealers and financial institutions have specific procedures for handling various order types, including those with time-in-force instructions. These procedures are subject to ongoing regulatory oversight to ensure "best execution," meaning brokers must use reasonable diligence to secure the most favorable terms for customer orders under prevailing market conditions7. For example, Fidelity's FAQs provide details on how good 'til canceled orders (which are similar to good through date orders in their extended duration) function and their expiration policies6.
Limitations and Criticisms
Despite their utility, good through/until date orders come with certain limitations and criticisms. The primary drawback is the lack of guaranteed execution. Even if the specified price is reached, the order may not be filled, or may only be partially filled, due to factors like thin liquidity or rapid price movements5. For instance, if a stop order becomes a market order during a volatile period, the execution price might be significantly different from the stop price4.
Another concern is the potential for market conditions to change dramatically over the order's duration. An order placed weeks or months in advance might become disadvantageous if the underlying fundamentals of the security or the broader market environment shift. Investors must remember to periodically review and, if necessary, cancel or adjust their outstanding good through/until date orders to align with current market realities and their evolving financial goals. FINRA advises firms that the definition of "prompt" execution must evolve with advances in financial market technology, implying that while orders may be active for a specified period, the underlying expectation for execution speed has significantly increased3.
Good through/until Date Order vs. Day Order
The key distinction between a good through/until date order and a day order lies in their time-in-force parameters. A day order is the simplest and most common type of order, active only for the current trading session. If it is not executed by the market close, it automatically expires and is canceled1, 2. This means that for a day order, an investor must re-enter the order each trading day if their desired price is not met.
In contrast, a good through/until date order allows the investor to specify a future calendar date for the order's expiration. This eliminates the need for daily re-entry, making it more convenient for those who wish to set a price target and let the market come to them over a longer period. While a day order provides immediate control and requires constant attention for multi-day targets, a good through/until date order offers set-and-forget convenience for a defined period, reducing the need for continuous monitoring. Both are specific types of time-in-force instructions designed to give traders greater control over their bid-ask spread and overall trade execution.
FAQs
Why would an investor use a good through/until date order instead of a day order?
An investor would typically use a good through/until date order for convenience and strategic planning. It allows them to specify a price and let the order remain active for weeks or months without having to re-enter it every day, which is required for a day order. This is beneficial for executing a long-term investing strategy or targeting specific prices during anticipated periods of market movement.
Can a good through/until date order be modified or canceled before its expiration date?
Yes, a good through/until date order can typically be modified or canceled by the investor at any time before it is fully executed or expires. Investors should always have the flexibility to adjust their orders in response to changing market conditions or personal financial goals. It's crucial to review such orders periodically.
What happens if the specified "good through" date falls on a weekend or holiday?
If the specified "good through" date falls on a weekend or market holiday, the order will generally expire on the last trading day prior to that date. Some brokers may have policies where it expires on the next business day, but it's essential to check with your specific broker-dealer for their exact policy.