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My limit order price gets reduced after ex-dividend date, why?

If you place a Good Till Cancelled (GTC) limit order on a stock, the order price may be automatically adjusted on the ex-dividend date when the stock issues a dividend.

This happens because when a company pays out a dividend, its overall value decreases by the dividend amount, cash leaves the business so the stock price usually drops by roughly the same amount on the ex-dividend date. To reflect this reduced value, GTC limit orders are adjusted downward automatically.

Example:

  • You place a GTC limit order to buy 100 shares of Stock A at $50.
  • The stock closes at $55 the day before the ex-dividend date.
  • Stock A announces a $1 dividend per share.
  • On the ex-dividend date, the stock price drops to $54 ($55 - $1).
  • Your GTC limit order is adjusted to $49 ($50 - $1).

This adjustment ensures your order stays aligned with the stock’s new market value after the dividend.