Open Order: Definition, How They Work, and Risks

Key takeaways

An open order is an unfilled, working order that remains active until its specified condition is met, it is cancelled, or it expires.
Open orders are typically conditional (limit or stop orders) and therefore may not execute immediately. Market orders are usually filled instantly and are not “open.”
Open orders can be useful for entering trades at preferred prices but carry risks if left unattended.

What is an open order?

An open order is a buy or sell order that has not yet been executed and remains active in the market. It will execute only when the conditions set by the trader (for example, a target price) are satisfied. If those conditions are never met, the order stays open until cancelled or it expires according to its time-in-force instructions.

How open orders work

Conditional nature: Open orders are commonly limit orders or stop orders. The order will execute only when the market reaches the specified price or trigger.
Execution delay: Because they depend on price conditions, open orders can remain unfilled for long periods, especially for less liquid securities.
Time-in-force: Traders choose how long an order remains active — for example, a day order (expires at market close) or good-til-canceled (GTC), which remains active until cancelled or it automatically expires per the broker’s policy.
Market depth: Open orders contribute to visible buy/sell interest at different price levels, helping indicate market depth.

Common types that remain open

Limit orders — buy or sell at a specified price or better.
Buy stop / sell stop orders — trigger a market or limit order once a certain price is reached.
(Contrast: market orders have no such conditions and are typically filled immediately.)

Risks of keeping orders open

Price movement risk: If the market moves against your intended trade while an order is open, you may end up executing at an undesirable time or miss a better opportunity.
Leverage exposure: Traders using leverage are particularly vulnerable to adverse moves while orders remain open.
Forgotten orders: Take-profit or stop-loss orders left in place can execute unexpectedly as conditions change, potentially locking in unwanted outcomes.
Broker policies: Many brokers will automatically cancel GTC orders after a set period (often several months), which can cause assumptions about protection or exposure to be incorrect.

Best practices

Review open orders regularly — ideally daily — to ensure they still reflect your strategy and market conditions.
Use day orders if you prefer to avoid overnight or multi-day exposure.
Adjust take-profit and stop-loss orders as your position or market outlook changes.
Be aware of your broker’s expiry and cancellation policies for GTC and other order types.
For active traders, consider closing positions or cancelling open orders at the end of the trading day to avoid unintended overnight risk.

Conclusion

Open orders are a useful tool for executing trades at preferred prices without needing to monitor the market continuously. They offer flexibility but require attention: review and manage them regularly, understand the specific order type and time-in-force you’re using, and be mindful of the risks—especially when using leverage or trading illiquid securities.