Wednesday, August 6, 2014

What "Good till Canceled" Actually Means

Let's say you put an order in to buy a particular asset (e.g., stock, ETF, etc.) at a given price. You then are asked to choose one of two options, namely: (i) to keep the order in place until a specified date; or (ii) to keep the order in place until canceled--typically called "good till canceled." It turns out "good till canceled" does not mean "good until you cancel it." Rather it means, "good until you cancel it" or, if you don't cancel before, it means "good until it automatically cancels 180 days after the order was opened." In other words, "good till canceled" will cancel automatically on the 180th day and you cannot, when you open the order, specify a date beyond the 180th day. So, if you want the order to continue after the 180th day, you have to put it in again on or before the 180th day. While this is spelled out (albeit in very confusing and ambiguous language in the smallest of small print) in Paragraph 12 of your 21 paragraph Terms of Agreement, if you have an honest broker, he or she will confess that he or she had no clue this was how open orders operated.

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