Good This Week - GTW

In Disney’s The Little Mermaid, the evil sea witch Ursula promises to make everyone’s favorite mermaid permanently human, but only if she can get her crush, Prince Eric, to fall in love with and kiss her before the sun sets on the third day. We always felt like this was a bad deal for Ariel; three days is not a whole heck of a lot of time to get someone to fall in love with us, no matter how charming or well-dressed we are.

Bu while short-term deals like this might not work out too well for cartoon mermaids, they can be great for investors. Good-this-week trade orders, or GTWs, can allow us to capitalize on short-term market fluctuations, but unlike Ariel, we won’t lose our soul if the order isn’t executed. At least, we hope not.

Here's how they work:

We tell our broker that we’d like to possibly execute a trade. Let’s say we decide that, if the price of Mermaid Aeronautics, Inc. stock drops below $150 per share, we want to buy 50 shares. If we set it up as a GTW, then our broker only has until close-of-business Friday to execute that order. If the order isn’t executed, it expires and is never seen or heard from again (much like Ariel was supposed to be in the movie).

We keep saying “our broker” because that’s how the majority of GTWs are handled: through brokers. In fact, they usually aren’t even an option if we’re trading online. There are other somewhat similar trade options available for the online trading crowd, but GTWs aren’t one of them. So if we’re looking to set up a trade order that expires when the sun sets on the third day (assuming that third day is Friday and that the sun sets at the same time the market closes), then we might need to go ahead and place a call to our broker.