# Open Order: Definition in Trading, How They Work, and Causes

## What is an Open Order?

An open order is an un-filled, or working order that is to be [executed](https://www.investopedia.com/terms/e/execution.asp) when an, as yet, unmet requirement has been met before it is cancelled by the customer or expires. The customer has the flexibility to place an order to buy or sell a security that remains in effect until their specified condition has been satisfied.

Because they are often [conditional](https://www.investopedia.com/terms/c/conditionalorder.asp), many open orders are subject to delayed executions since they are not [market orders](https://www.investopedia.com/terms/m/marketorder.asp). Sometimes, a lack of market [liquidity](https://www.investopedia.com/terms/l/liquidity.asp) for a particular security could also cause an order to remain open.

### Key Takeaways

*   Open orders are those unfilled and working orders still in the market waiting to be executed.
*   Orders may remain open because certain conditions such as limit price have not yet been met.
*   Market orders, on the other hand, do not have such restrictions and are typically filled fairly instantaneously.
*   Open orders may be cancelled before they are filled in whole or in part.

## Understanding Open Orders

Open orders, sometimes called 'backlog orders' can arise from many different order types. Market orders, which cannot have restrictions, are typically filled instantaneously or cancelled. There are rare instances when market orders remain open till the end of the day at which time the brokerage will cancel them.

Open orders are usually [limit orders](https://www.investopedia.com/terms/l/limitorder.asp) to buy or sell, [buy stop orders](https://www.investopedia.com/terms/b/buystoporder.asp) or sell stop orders. These orders basically offer investors a bit of latitude, especially in price, in entering the trade of their choosing. The investor is willing to wait for the price that they set before the order is executed. The investor can also choose the time frame that the order will remain active for the purpose of getting filled. If the order does not get filled during that specified duration than it will be deactivated and said to have expired.

Open orders often have a [good 'til cancelled](https://www.investopedia.com/terms/g/gtc.asp) (GTC) option that can be chosen by the investor. Investor can also, at any time after placing the order, cancel it. Most brokerages have stipulations that state that if open orders remain active (not filled) after several months, they will automatically expire. They are often used to measure market [depth](https://www.investopedia.com/terms/d/depth-of-market.asp).

## Open Order Risks

Open orders can be risky if they remain open for a long period of time. After you place an order, you are on the hook for the price that was [quoted](https://www.investopedia.com/terms/q/quoted-price.asp) when the order was placed. The biggest risk is that the price could quickly move in an adverse direction in response to a new event. If you have an order that's open for several days, you may be caught off guard by these price movements if you're not constantly watching the market. This is particularly dangerous for traders using [leverage](https://www.investopedia.com/terms/l/leverage.asp), which is why [day traders](https://www.investopedia.com/terms/d/daytrader.asp) close all of their trades at the end of each day.

In addition to orders that remain open, traders must also be cognizant of open orders to close. You might have a [take-profit](https://www.investopedia.com/terms/t/take-profitorder.asp) order in place one day, but if the stock becomes materially more bullish, you must remember to update the trade to avoid prematurely selling shares. The same goes for [stop-loss](https://www.investopedia.com/terms/s/stop-lossorder.asp) orders that may need to be adjusted to account for certain market conditions.

The best way to avoid these risks is to review all open orders each day, or ensure that you close all orders at the end of each day by using [day orders](https://www.investopedia.com/terms/d/dayorder.asp) rather than good-til-canceled (GTC) orders. This way, you are always aware of your open positions and can make any adjustments or re-initiate new orders at the beginning of the next trading day.