We have all heard this term very often, Stock trading! The most commonly used term in the markets, which we hear in every economic news. What is stock trading according to you? Have you done it before? We shall discuss here, about the trading, stock trading and all other things related to it, stay here.
Trading means either buying or selling in the idiom of financial markets! But, we wonder how can millions and billions of trading happen in a single day, that too, mostly within 10-14 hours? Well, as a common man, we too were surprised! But, not anymore; as we have made our study about the markets, and it's no more a wonder for us!
It’s clearly the wonder of technology that has been upgrading the way trading takes place. Although, you don’t need to know every detail about the stock trading, getting the basics right will help you in the long run.
The basic methods used in stock trading are:
This is the most commonly used method, which is extremely accepted. Though few systems use the non-electronic method, few other systems like the NASDAQ are completely digitalised. These electronic markets make use of the networking part to reach to the human needs, which are into buying and selling. This system is the most efficient and fastest among others. Many large traders like the mutual funds, pension funds, and other large companies rely on this electronic method to do the general trading.
Mediator between you and the Markets
This type of trading gives one an instant update about the stock in hand, or the stock that is interested as, the listing and all the details that a consumer needs. The confirmations and control are given to you at every step. You can do all the processing’s online, acquiring a stock, selling, and other trades. Again here, brokers are involved who are none other than brokerage companies, that acts as a mediator between you and the markets.
They work on your behalf; do the tasks as said by you. In case you don’t want to deal with trading’s but need only long-term plans, then they are ready to offer the same, with a small amount taken as a charge. The broker or the broker company has the code to enter the markets and do the work for you. As a common man, we are not allowed to access the networks and markets directly, due to the sensitive data that it holds and the volatility which makes it more sensitive.
We have filed a step by step procedure, that happens at an on the floor trading:
The consumer or customer requests a broker to buy shares on their behalf, an amount like 100, 200, or 1 lot, 10 lots etc, for the most trending stock, is placed for order.
The broker's order sends the order to the floor clerk of the exchange.
This floor clerk alerts one of the requested firm's floor trader, who gets another trader willing to exchange the stock.
Both parties agree on the price and deal. The process notification goes on the top of the line and the broker calls on you both for a final call, taking a few more minutes of time.
Once the deal is accepted, you will receive a mail confirmation.
Well, these are the basic working methods of the trade. Electronic method is the one most used, and it has more benefits than the on floor exchange. When there is everything digitalised, you can find more transparency and clarity in the system. The consumer is informed at every step and then the process happens.
When you recollect memories, most of the old movies portray the exchange as on the floor exchange, where people wait or sit around to get the trade job, especially the NYSE market. One can see the chaotic look and drama all around, that includes a variety of jobs.
The ones commonly seen are people watching monitors, making calls, entering a large amount of data into the system, screaming over the appreciation and fearing for the worst, all mixed expressions can be seen!
So, you choose what to trade and how, based on the methods, else give it totally to your broker who deals on your behalf.