Comment on Introducing GTT – Good Till Triggered orders
commented on
26 Sep 2019, 09:26 AM
Hey Jaydeep,
Corporate actions announced by companies, we will know much ahead in advance on how much the stock value will actually change. For example if a stock is at 100 and a 1:1 bonus is announced as on ex-date of 1st Oct, we know that instead of 1 share of 100, client will have 2 shares of 50. So on 1st Oct there will be a 50% drop in the value of the stock. But understand that corporate action doesn’t change the overall value of the stock you own. So we have two options, either ask clients to cancel the pending GTT and modify it accordingly or cancel it on our own after informing and ask clients to place fresh GTT. The reason we decided to cancel it on our own is that most people don’t read the messages we send out to them.
Coming to a news event, there is no way for anyone to know how much the movement of the stock is going to be. Most people who use GTT, use it as a stoploss. So the idea is to protect, and if we cancel it, what is even the point of having a GTT type of order. The idea of GTT isn’t to time the market entry/exit, it is to provide long-standing orders. If you are an active trader trying to time the market, it is best not to use GTT.