What is an Open Order?
An open order (also called a working order or backlog order) is any buy or sell instruction you have placed with a broker that has not yet been executed or cancelled. Open orders remain active until their execution conditions are are satisfied, they expire under the time-in-force you chose, or you cancel them.
Key takeaways
– An open order is any order that has not yet been filled or cancelled.
– Most open orders are conditional (limit, stop, stop‑limit) and therefore may not execute immediately; market orders are usually filled immediately.
– Time‑in‑force options (day, good‑til‑cancelled/GTC, etc.) determine how long an order stays open.
– Open orders can be useful for automation and discipline but carry risks—especially if left unattended for long periods or when using leverage.
– Regularly reviewing and managing open orders reduces the chance of unwanted fills or missed opportunities.
Understanding open orders
Types of orders that commonly remain open
– Limit order: buy or sell at a specified price (or better). Stays open until the market reaches that price (and your time‑in‑force allows).
– Stop (stop‑loss) order: becomes a market order once a stop price is hit; may execute at a worse price during fast moves.
– Stop‑limit order: becomes a limit order when the stop is hit; provides price control but risks non‑execution.
– Good‑til‑cancelled (GTC): remains open beyond a single trading day until cancelled or it expires per broker rules.
– Day order: expires at market close if not filled.
– Other special instructions: immediate‑or‑cancel (IOC), fill‑or‑kill (FOK), one‑cancels‑other (OCO), trailing stops.
Why orders stay open
– Conditional nature: limit and stop orders only execute if certain prices are reached.
– Market hours and liquidity: if a security is thinly traded or outside trading hours, orders may not fill.
– Price gaps: if the market opens past your limit or stop levels, the order may not be executed at the expected price (or may not execute at all, depending on type).
How brokers treat open orders
– Brokers display open orders in your account and let you cancel/modify them.
– Brokers often impose automatic expirations on GTC orders (many brokers set their own expiry — check your broker’s policy).
– Some brokerages aggregate and route orders based on their execution systems and market access; execution quality and fill behavior can vary.
Open order risks
1. Price movement risk
– If your order is executed after an adverse price move, you could be filled at an unfavorable price. Market orders are especially subject to slippage; stop orders can turn into market orders and be filled well below the stop during fast moves or gaps.
2. Stale or unwanted fills
– A take‑profit (sell limit) or stop‑loss left in place may cause an unintended sale if the market later becomes materially different than when you placed the order.
3. Liquidity and partial fills
– Low liquidity can produce partial fills at several price levels. That can leave a remaining quantity still open.
4. Leverage magnifies risk
– Traders using margin or derivatives can suffer large losses if open orders are executed during volatile moves.
5. Operational/expiration surprises
– Some brokers automatically cancel or expire GTC orders after a set period (e.g., 30–90 days). If you assume a GTC order is permanent, you may be blindsided when it disappears.
Practical steps to manage open orders (checklist and procedures)
1. Choose the right order type for your goal
– Use market orders when immediacy matters and you accept slippage.
– Use limit orders when you need price control.
– Use stop‑limit instead of stop‑market if you must avoid execution below (or above) a threshold—understand the trade‑off (may not execute).
2. Select an appropriate time‑in‑force
– Day orders if you want positions/orders only during a single trading day.
– GTC only when you intentionally want an order to persist, but verify your broker’s automatic-expiration policy.
3. Use bracket/OCO orders when possible
– Place a take‑profit and a stop‑loss together in a one‑cancels‑other setup to limit downside and lock in gains automatically.
4. Set alerts and notifications
– Configure price alerts and order‑status notifications (email, SMS, app push) so you know when events occur.
5. Review open orders daily
– Make a habit of checking open orders at the start and end of each trading day; cancel or adjust those that no longer match your thesis.
6. Consider time of day and market conditions
– Avoid placing large GTC orders in low‑liquidity periods (e.g., before major data releases or outside regular hours).
7. Mind corporate actions and ex‑events
– Splits, dividends, spin‑offs, and mergers can change the nature of orders or ticker symbols—review orders when such events occur.
8. Be careful with stops on overnight or weekend risk
– Overnight gap risk can cause stop orders to execute at unintended prices the next session. Consider stop‑limit or hedging if concerned.
9. Use smaller, staged orders for illiquid stocks
– Break large orders into smaller kids to reduce market impact and likelihood of partial fills at wide price ranges.
10. Know your broker’s rules and fees
– Read your broker’s documentation on order expiration, routing, and any fees or minimums that could affect order handling.
Concrete examples
– Example 1 — Limit buy left open: You set a limit buy for 200 shares of ABC at $45 while the market is $50. The order remains open until ABC drops to $45 (or better) or you cancel it. If you want to avoid it staying indefinitely, set “day” or a specific GTC expiry.
– Example 2 — Stop‑loss risk: You place a stop‑loss at $48 on a $52 stock (a stop‑market). Overnight the stock gaps to $44. Your stop triggers and turns into a market order, and you may be executed around $44 (worse than the $48 stop). A stop‑limit could prevent sale below a floor but may mean you stay long if limit not met.
– Example 3 — Bracket order: You buy a stock at market and immediately place an OCO with a sell‑limit at +10% and a stop‑loss at −6%. If one executes, the other is cancelled automatically.
Best practices summary
– Match order type to your objective (execution vs price control).
– Prefer day orders if you actively trade intraday; use GTC sparingly and monitor them.
– Use alerts and OCO/bracket orders to automate risk management.
– Review open orders routinely, especially before and after major market events.
– Know your broker’s GTC expiry and routing behavior.
When to consult a professional
If you use complex strategies (heavy leverage, options, shorting) or trade large blocks or illiquid securities, get guidance from a licensed broker or financial advisor about order types and execution strategies tailored to your circumstances.
Further reading and sources
– Investopedia — “Open Order”: https://www.investopedia.com/terms/o/openorder.asp
– FINRA — “Types of Orders” (investor education): https://www.finra.org/investors/learn-to-invest/types-orders
– U.S. Securities and Exchange Commission — Investor Bulletin on order handling: https://www.sec.gov/oiea/investor-alerts-bulletins/ib_orders
Disclaimer
This article explains concepts and practical steps for managing open orders. It is educational and not investment advice. Check your broker’s rules and consult a licensed professional for decisions tailored to your situation.