# Time in Force: Trading Order Durations and Types

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> **Definition**
>
> Time in force is a special instruction used when placing a trade to indicate how long an order will remain active before it is executed or expires.

## What Is Time in Force?

Time in force defines the duration a trading order remains active before [execution](https://www.investopedia.com/terms/e/execution.asp) or expiration, crucial for active traders managing time-sensitive investments. This article explores various time in force options such as immediate-or-cancel (IOC) and day orders, detailing their significance in executing precise trading strategies.

### Key Takeaways

*   Time in force specifies how long a trading order remains active before execution or expiration, offering essential timing control to traders.
*   Common time in force orders include day orders, good-'til-canceled (GTC), fill-or-kill (FOK), and immediate-or-cancel (IOC).
*   Using time in force orders helps active traders avoid accidental trades, especially in volatile market conditions.
*   Different order types, such as market-on-open (MOO) or limit-on-open (LOO), provide additional timing flexibility for traders.
*   Good-'til-canceled (GTC) orders are suitable for long-term investors waiting for specific price conditions but should include expiration limits to avoid indefinite hold.

## Understanding the Fundamentals of Time in Force

Time in force orders help active traders avoid accidental trade executions. By setting time limits, they don't need to remember to cancel old trades. Unintended trades can be costly, especially in [volatile](https://www.investopedia.com/terms/v/volatility.asp) markets with rapidly changing prices.

Most [active traders](https://www.investopedia.com/terms/a/active-trading.asp) use [limit orders](https://www.investopedia.com/terms/l/limitorder.asp) to control stock prices and set time in force to manage order duration. Day orders are common, but there are times when other order types are better.

There are several different types of time in force orders that traders can use. Some brokers offer few order types, but active traders often have more options. Brokers often use acronyms like DAY, GTC, IOC, GTD, and DTC for these orders.

## Exploring Different Types of Time in Force Orders

[Day orders](https://www.investopedia.com/terms/d/dayorder.asp) are a popular type of time in force order. They are canceled if the trade does not execute [by the close of the trading day](https://www.investopedia.com/terms/e/end-of-day-order.asp). These are often the default order type for brokerage accounts.

Another type of time in force order are [Good-Til-Canceled (GTC) orders](https://www.investopedia.com/terms/g/gtc.asp), which are effective until the trade is executed or canceled. Some common exceptions include stock splits, distributions, account inactivity, modified orders, and during quarterly sweeps. These can be a useful option for a long-term investor who is willing to wait for a stock to reach their desired price point before pulling the trigger. Sometimes, traders might wait several days or even weeks for a trade to execute at their desired price.

[Fill-or-Kill (FOK) orders](https://www.investopedia.com/terms/f/fok.asp) are a third type of time in force order. They are canceled if the entire order does not execute as soon as it becomes available. Often, these are used to avoid purchasing shares in multiple blocks at different prices and to ensure an entire order executes at a single price. These can be popular during fast-moving markets where day traders wants to ensure that they get a good price on a trade.

A few other order types include [Market-on-Open (MOO)](https://www.investopedia.com/terms/m/marketonopen-order-moo.asp) and [Limit-on-Open (LOO)orders](https://www.investopedia.com/terms/l/limitonopenorder.asp), which execute as soon as a market opens; [immediate-or-cancel (IOC) orders](https://www.investopedia.com/terms/i/immediateorcancel.asp), which must be filled immediately or are canceled; and [day-til-canceled (DTC) orders](https://www.investopedia.com/terms/g/gtc.asp) that are deactivated at the end of the day instead of canceled, making it easier to re-transmit the order later.

## Practical Example: How Time in Force Works in Trading

John believes that the price of stock ABC, which is currently trading at $10, will rise but it will take time, approximately three months. He purchases ABC call options with a strike price of $15 and places a Good 'Til Cancelled (GTC) order. To avoid having the order remain on hold indefinitely, he places a limit of three months on the order. After three months, stock ABC's price is still struggling to break past the $12 mark. John's order is cancelled automatically.

## The Bottom Line

Time in force is a critical instruction in trading, defining how long an order will remain active before it executes or expires. Understanding different types—such as day orders, good-til-canceled, fill-or-kill, and immediate-or-cancel orders—empowers traders to manage their strategies effectively. By using these orders, active traders can avoid unintended executions during volatile market conditions.

Remember, selecting the appropriate time in force order type depends heavily on your individual trading goals and market environment. Be sure to consult with your broker about the order types they offer and choose the ones that best align with your trading strategy.