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What is a Time Order?

Article Details
  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 13 October 2018
  • Copyright Protected:
    2003-2018
    Conjecture Corporation
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Time orders are orders to a broker issued by an investor. The time order proper will include instructions to execute a transaction at a specific point in time. The use of this type of trading order makes it possible for investors to arrange transactions in advance and hopefully take advantage of favorable market conditions to achieve a higher rate of return on the investment.

Before issuing a time order to a broker, the investor often will engage in projecting the performance of a given stock or security over a specified time period. The idea is to identify the best future points to either acquire or sell off the security in question. By identifying specific points where the action is reasonably anticipated to produce a desired result, it is possible for the investor to make arrangements in advance with a broker to execute the order and thus realize the best return from the transaction.

It is important to note that the investor has the ability to kill or rescind a time order right up to the date connected with the preplanned transaction. When a time order is not executed due to actions initiated by the investor, the order is normally considered canceled. However, it is also possible for the time order to be converted into a limited price order or a market order. This will depend on the nature of the instructions issued by the investor to the broker.

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The use of a time order is very common in most investment markets. Because the creation and issuance of a time order does involve some skill in projecting future performance of a given stock or security, it is not always the best approach for new investors. However, a seasoned investor with a demonstrated ability to accurately predict the performance of securities can often make a huge return utilizing a time order approach. Brokers can often assisted new investors in understanding how to craft a time order, and what to do in the event the order needs to be rescinded at some point before the actual execution.

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