A Day Order is a common type of order used in stock and securities trading, allowing investors to specify that their buy or sell instruction is valid only for the current trading day. This means if the order is not executed by the market’s close—typically 4 p.m. Eastern Time for U.S. markets—the order expires and is canceled automatically.

Traders and investors use Day Orders to limit their risk of orders being executed outside their intended time frame, especially in fast-moving markets where price fluctuations can be significant overnight. Unlike Good-Til-Canceled (GTC) orders, which remain active until explicitly canceled or executed, Day Orders provide more control over the timing of trading activity.

How Day Orders Work:

  • When you place a Day Order, it is entered into the market and remains active only for the trading session on that day.
  • If the order conditions are met (e.g., the stock reaches your specified price), the order is executed.
  • If not executed by the market close, the order is automatically voided.

Benefits of Using Day Orders:

  • Flexibility to limit exposure to unwanted price movements after market hours.
  • More precise control over the timing and price of trade execution.
  • Can prevent unexpected trades due to changing market conditions overnight.

Limitations:

  • Orders that don’t execute on the day must be re-entered on subsequent days if still desired.
  • May miss trading opportunities if the price target is met outside active hours.

For investors active in U.S. markets, understanding order types like Day Orders is essential for effective trading strategy. You can find more information on trading orders and their nuances on the U.S. Securities and Exchange Commission’s investor education page.

To explore related trading terms and order types, see our glossary entries on Good ‘Til Canceled Order and Limit Order.