DEFINITION of day order
A day order is an order to buy or sell a security by the end of the day.
WHAT IT IS IN ESSENCE
This is instruction from a trader to their broker, to buy or sell a security. It automatically expires if there is no execution on the date the order was placed. Which means, if the trader does not execute the order on the time it was placed, the order will be canceled.
Setting a day order means that the deal has to be completed if an asset hits a specified price. At any point during the trading day on which the order is made.
The day order will expire if the price given in the order is not met to the market ‘s closing time.
There are two different types: stop day orders and limit day orders.
If the price at which the trade will be executed is more convenient than the current market price it is a limit day order. If it is less convenient it is a stop day order. The meaning of day orders is different from ” good-’til-canceled” (GTC) orders, or orders that specify a longer or shorter time period for execution.
Using this, investors can keep trades under control because they are a form of the limit order. They are actually rather long compared to other time limits investors can put on orders. In some cases, orders can expire in as little as a few minutes.
HOW TO USE
Most brokers and trading platforms tend to use day orders as the default means of trading. Meaning that a trade will expire if unexecuted after a day unless a different time frame is specified. It allows investors to set the amount of time a trade order is good for. The different types of trade order timing each have different advantages. And also disadvantages. They play along with the different strategies an investor may have or wish to use.