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Time In Force: When To Cancel the Order

Time In Force stock

We all know that day trading and the stock markets use a very specific trading lingo. Beginners usually get lost trying to understand everything they read. So if you’re an active trader or you are just learning to trade you should be familiar with those terms. Today I’m writing about TIF or Time in Force. You can found this available in almost every broker and trading platform.

Time In Force – When To Cancel the Order

Time in Force only works with Limit orders. When you decide that you refuse to pay the market price and have the desired price you want to pay.

When you set a limit order of any sort (Stop Limit or just Limit). You will be asked when do you want it to expire (the actual execution of the trade, not how long you hold the shares).

That’s pretty self-explanatory, but you must be wondering what does time in force mean? Here’s the definition

What is time in force?

Time in force or TIF meaning is pretty simple, it’s an option available when placing an order. It only works with limit orders and it enables an order to be open for more than a trading day. The Time in force helps to pay less commission.
Since TIF is a tool to decide how long an order will remain open. It can give you a lot of control over the time of the orders you place

Time in force explained

It’s simple to understand Time in force. When placing orders, we must know is important to consider the time we want an order to be open before it expires or before I decided to fill it. It’s just that.

This suits well to swing traders. Using TIF will give them a better opportunity to manage their trades. If you have your market analysis done, adding a time in force limit for trades will help you avoid trades to executed beyond the desired trading time. This takes traders a weigh-out from their shoulders.

We know you can’t avoid many of the big price change in the market. But this tool you sure can mitigate the losses with this tool.

Types of time in force

Here are 2 of the most common limit orders for you to choose from:

GFD- Good for Day Order

Whatever price you decide you only want it executed during market hours of that day. If it doesn’t reach that price that day, it will be canceled, and you can decide what you want to do the next day.

GTC – Good Til Canceled

This order will not be canceled overnight or even in the near future. You can set the dates you want it to be canceled as well.
These are the most important to know and always remember to set it right!