Day Order

A day order is an order to buy or sell securities that expires unless executed or canceled the day it is placed. All orders are typically day orders unless otherwise specified.
On this page

Definition

A day order is an instruction given to a broker or trading platform to buy or sell a security that is only valid for the current trading day. If the order is not executed within the same day, it will automatically expire and be canceled. This type of order is the default setting for most stock exchanges and is typically used by traders to take advantage of short-term price movements.

Examples

  1. Buying Stock: An investor places a day order to buy 100 shares of XYZ Corporation at $50 per share. If the stock reaches $50 within the trading day, the order will be executed. If it doesn’t, the order will expire at the end of the trading day.

  2. Selling Stock: A trader places a day order to sell 50 shares of ABC Inc. at $30 per share. If the market price touches or exceeds $30, the shares are sold. If not, the order is canceled at the end of the trading day.

  3. Limit Orders: A day order can also be a limit order. For instance, an investor wants to purchase shares of DEF Ltd. but only if the price falls to $25 or lower. They place a day order with a limit price of $25, ensuring the order expires at the end of the day if not filled at or below $25.

Frequently Asked Questions (FAQs)

Q1: What happens if my day order isn’t executed? If your day order isn’t executed by the end of the trading day, the order is automatically canceled and your planned transaction does not occur.

Q2: Can a day order be changed to a good-till-canceled order (GTC)? Yes, most brokerage platforms allow you to modify the type of your order. You will need to cancel the day order and place a new GTC order.

Q3: Is there an extra fee for a day order compared to other types of orders? Typically, there are no additional fees for placing a day order. However, fees and commissions depend on your broker’s policies.

Q4: Are day orders effective in after-hours trading? No, day orders are only effective during the regular trading hours of the stock exchange.

Q5: Can day orders apply to other types of investments besides stocks? Yes, day orders can be applied to other markets, including options, futures, and Forex, depending on the broker’s offerings.

  • Good-Till-Canceled Order (GTC): An order to buy or sell a security that remains active until the order is canceled or executed.
  • Limit Order: An order to buy or sell a security at a specific price or better.
  • Market Order: An order to buy or sell a security immediately at the best available current price.
  • Stop Order (or Stop-Loss Order): An order to buy or sell a security once the price reaches a specified level.

Online References

Suggested Books for Further Studies

  • “Stock Market Orders Made Simple” by Ross Cameron
  • “Investing For Dummies” by Eric Tyson
  • “Day Trading For Dummies” by Ann C. Logue
  • “Trading for a Living” by Dr. Alexander Elder
  • “The Intelligent Investor” by Benjamin Graham

Fundamentals of Day Orders: Finance Basics Quiz

Loading quiz…

Thank you for exploring the comprehensive details of day orders in securities trading and for challenging yourself with our educational quiz. Keep expanding your knowledge in finance and investing!

Day Trade
Day Book