When you place a stock order, you choose not only the type (market, limit, stop) but also how long it should remain active. A day order is the most common duration setting, automatically expiring at the end of each trading day. Let us explore how day orders work and when to use them.
What is a Day Order?
A day order is valid only for the current trading session. If your order does not fill by market close (4:00 PM Eastern Time for US stocks), it automatically cancels. You do not need to do anything - unfilled day orders simply disappear when the market closes.
Think of it like a same-day offer: You make an offer to buy or sell that is only good for today. If no one accepts by closing time, the offer expires and you start fresh tomorrow.
How Day Orders Work
Here is the typical flow of a day order:
- You place a limit order to buy at $50 during market hours
- The order is marked as a "Day" order (often the default setting)
- Your order sits in the market waiting for $50
- If filled before 4:00 PM ET, you own the shares
- If not filled by 4:00 PM ET, the order cancels automatically
- Tomorrow you can place a new order if still interested
Day Order Example
At 10:00 AM, you place a day limit order to buy 100 shares of AMD at $145. The stock is currently at $148.
- 10:00 AM - 2:00 PM: AMD trades between $147-$150, no fill
- 2:30 PM: AMD dips to $146, still above your $145 limit
- 4:00 PM: Market closes. AMD never hit $145
- Your order automatically cancels
If you still want AMD at $145 tomorrow, you must place a new order.
Why Day Orders Are the Default
Most brokers set day orders as the default because they are the safest option for most traders:
- No stale orders: Every order starts fresh each day
- Reflects current thinking: You actively decide each day
- Prevents surprises: No forgotten orders filling unexpectedly
- Clean order book: Unfilled orders do not pile up
Advantages of Day Orders
1. Automatic Cleanup
You never have to worry about canceling unfilled orders. They disappear at market close, keeping your account tidy.
2. Daily Review Required
Day orders force you to reassess your trading ideas each morning. This prevents acting on stale analysis or forgotten setups.
3. No Surprise Fills
You will never be surprised by an order filling weeks after you placed it. What you see is what you get for today only.
4. Better for Day Traders
Day traders should close positions daily anyway. Day orders ensure you start each session with a clean slate.
5. Adapts to Market Changes
Markets change overnight. News, earnings, and global events can shift your view. Day orders let you adapt rather than being locked into yesterday's prices.
Disadvantages of Day Orders
1. Must Re-Enter Daily
If you want to buy at a specific price, you need to place the order every single day until filled. This can be tedious for patient traders.
2. Might Miss Overnight Moves
Day orders are inactive in pre-market and after-hours unless you specifically enable extended hours trading. A stock might hit your price at 5:00 AM but your day order was not active.
Missed Fill Example
You place a day order to buy XYZ at $30. The stock closes at $32.
Overnight, news breaks. The stock opens at $28 the next morning - below your $30 target. But your day order expired last night. You miss the opportunity.
A GTC order would have been active and filled at $30 in pre-market.
3. Time Zone Challenges
If you cannot access markets during regular trading hours, day orders may expire before you can adjust them.
Day Orders vs GTC Orders
| Feature | Day Order | GTC Order |
|---|---|---|
| Duration | One trading day | Until filled or canceled (60-180 days) |
| Automatic expiration | 4:00 PM ET same day | Broker time limit |
| Requires daily action | Yes | No |
| Risk of forgotten orders | None | Yes |
| Best for | Day traders, active traders | Swing traders, investors |
When to Use Day Orders
- Day trading: All positions close daily anyway
- Active management: You check markets and adjust orders daily
- Fast-moving situations: Today's opportunity may not exist tomorrow
- News-driven trades: The catalyst is time-sensitive
- Uncertain targets: You want to reassess your price each day
When to Use GTC Instead
- Waiting for specific prices: Willing to wait days or weeks
- Limited time to trade: Cannot monitor markets daily
- Long-term entries: Patient accumulation strategy
- Profit targets: Set and forget sell orders
- Stop losses on holdings: Protection that spans multiple days
Day Orders and Extended Hours
Standard day orders typically work only during regular market hours (9:30 AM - 4:00 PM ET). However, many brokers offer extended hours trading:
- Pre-market: 4:00 AM - 9:30 AM ET
- After-hours: 4:00 PM - 8:00 PM ET
If you want your day order active in extended hours, you usually need to specifically enable this option. Check your broker's settings.
Tips for Using Day Orders
- Check the default: Know whether your broker defaults to Day or GTC
- Set morning reminders: Re-enter orders early if you want them active all day
- Review at close: Check what did not fill to decide about tomorrow
- Consider time zones: If you cannot trade during market hours, GTC might be better
- Use for short-term ideas: Perfect for setups that should trigger today or not at all
Track Your Order History
Pro Trader Dashboard logs all your orders - filled and expired. See patterns in your trading and optimize your order strategy.
Summary
Day orders are active only for the current trading session and automatically cancel at market close. They are the safest default for most traders, ensuring no stale orders pile up and forcing daily reassessment of trades. Day traders should always use day orders, while longer-term traders might prefer GTC orders for patience.
Explore other order duration options like fill or kill for immediate execution requirements, or learn about all or none orders for complete fills.