What it is:
How it works/Example:
Let's assume you want to buy 100 shares of Company XYZ, but you don't want to pay more than $5 per share for the stock. If you place a $5 limit order, you are instructing your broker to buy 100 shares at any price up to $5 per share.
Likewise, if you wanted to sell your Company XYZ holdings for no less than $10 per share, you could place a $10 limit order, meaning that your broker can execute the sale at prices no lower than $10 per share. By adding a good through, you give the broker a certain number of days to execute the order. The order is automatically canceled at the deadline unless the order is filled.
Why it matters:
Good through orders, like most limit orders, can limit losses and lock in profits by giving investors some sort of a specified purchase or sale price by a certain day. This makes them very useful in low volume or high volatility markets, but is important to note that this type of order will not be executed if the market price does not meet the order requirements. This can be troubling for investors who need immediate liquidity.