What Is a Day Order? Definition, Duration, Types, and Example

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What Is a Day Order? Definition, Duration, Types, and Example

Definition

A day order is an instruction to buy or sell a security at a specified price that remains active only for the current trading session. If the order is not executed by market close, it is automatically canceled. Day orders are commonly used as the default time-in-force on many trading platforms.

Key takeaways

  • A day order expires at the end of the trading day if not filled.
  • It can be a limit order or a market order, but the time-in-force is one trading session.
  • Traders who need intraday execution or who don’t want orders to carry overnight often prefer day orders.

How day orders work

  • Place order (limit or market) during an open trading session.
  • If the execution price is met during the session, the order fills.
  • Any unfilled portion is canceled automatically at market close.
  • To remain active beyond the session, a different time-in-force (e.g., GTC) must be specified.

Related order-duration types

  • Good ‘Til Canceled (GTC): Stays active until filled or manually canceled (may expire after a broker-defined period).
  • Immediate or Cancel (IOC): Fills all or part immediately; any unfilled portion is canceled.
  • Fill or Kill (FOK): Must be filled in full immediately or canceled.
  • Market-On-Open (MOO): Executes at or near the market open.
  • Market-On-Close (MOC): Executes at or near the market close.

When traders use day orders

  • Intraday traders who open and close positions within the same session.
  • Traders who want to set a specific entry or exit price without monitoring the market all day.
  • Situations where avoiding overnight exposure or news risk is important.

Example

You want to buy 100 shares of XYZ currently trading at $50 but only if the price drops to $48:
1. Enter a limit buy day order for 100 shares at $48.
2. If XYZ trades at $48 during that session, your order (or part of it) fills.
3. If the price never reaches $48, the order is canceled at market close.

Risks and best practices

  • Unwatched executions: A day limit sell can execute during an unexpected drop before you can react.
  • Know platform defaults: Many brokers default to day orders—explicitly set a different time-in-force if desired.
  • Use stops or alerts: Combine orders with stop-losses or price alerts to manage risk.
  • Match order type to strategy: Use day orders for intraday trading; use GTC or specify expiration for longer-term intentions.

Bottom line

A day order is a simple, time-bound way to place a trade that reduces overnight exposure. It’s well suited to intraday strategies but requires awareness of execution risk and platform defaults. Choose the appropriate time-in-force to match your trading horizon and risk tolerance.