What is a long-term order?
A long term order is an order that remains active until it is filled, canceled, or otherwise expires under the terms of the order. Unlike a day order, it does not automatically cancel at the end of the trading day. Long-term orders include Good ‘Til Canceled (GTC) orders and Custom Duration orders. Custom Duration orders have a specified expiration date. GTC orders remain open until filled, canceled or until they expire.
Can corporate actions affect long-term orders?
Yes. Corporate actions that a security’s share price, share quantity, or trading terms, such as reverse stock splits and stock splits, may affect the validity of existing long-term orders.
Reverse stock split example: A client holds 100 shares in Company A at a market price of $5 per share, for a total value of $500. If Company A completes 1-for-10 reverse stock split, the client will hold 10 shares after the consolidation, at a new price of $50 per share, with the total value remaining at $500. However, a long-term buy order for 100 shares placed before the split was based on the pre-split price structure. After the reverse stock split, the security trades at approximately $50 per share. A long-term order entered before the split using the pre-split share quantity or price may no longer reflect the post split security and may therefore be canceled.
Stock split example: A client holds 100 shares in Company B at a market price of $5 per share, for a total value of $500. If Company B announces a 10-for-1 stock split, the client will hold 1,000 shares after the split, at a new price of $0.5 per share. A long-term order entered before the split using the pre-split share quantity or price may no longer reflect post split security and may therefore be adjusted or canceled.
How does Longbridge handle affected long-term orders?
Affected long-term orders will be canceled before the market opens on the ex-date of the relevant corporate action. If you still wish to trade, please resubmit your order after the corporate action has been processed and the adjusted security is available for trading.