Trading is the process of buying and selling of commodities, securities within a country or between countries. It is generally a short term activity done for making quick profits. For performing a trade, it is very important to have a basic understanding of how the markets works.
Basically financial markets are divided into two types - primary markets and secondary markets. Primary markets consist of newly issued shares created by the companies through Initial Public Offering (IPO). And the secondary markets consist of the shares that have already been issued by the companies previously. These shares can be traded without the involvement of issuing company and when people speak of the stock market they are talking about the secondary market, not primary.
There are two basic ways to execute a trade - On the exchange floor and the electronic or online markets. In the exchange floor, we can get the information about the markets using television and newspaper. In this exchange floor, the broker finds floor traders and execute the trade between them. In this process the broker acts an intermediate between the traders and calls the final price and executes the trade.
The electronic markets make use of vast computer networks to connect buyers and sellers all over the world. The NYSE handles a small percentage of its trading electronically, while its rival NASDAQ is completely electronic. Many large institutional traders, such as pension funds, mutual funds, etc. prefer this method of trading. Here the broker accesses the exchange network and the system finds a buyer or seller depending on your order.
Basically financial markets are divided into two types - primary markets and secondary markets. Primary markets consist of newly issued shares created by the companies through Initial Public Offering (IPO). And the secondary markets consist of the shares that have already been issued by the companies previously. These shares can be traded without the involvement of issuing company and when people speak of the stock market they are talking about the secondary market, not primary.
There are two basic ways to execute a trade - On the exchange floor and the electronic or online markets. In the exchange floor, we can get the information about the markets using television and newspaper. In this exchange floor, the broker finds floor traders and execute the trade between them. In this process the broker acts an intermediate between the traders and calls the final price and executes the trade.
The electronic markets make use of vast computer networks to connect buyers and sellers all over the world. The NYSE handles a small percentage of its trading electronically, while its rival NASDAQ is completely electronic. Many large institutional traders, such as pension funds, mutual funds, etc. prefer this method of trading. Here the broker accesses the exchange network and the system finds a buyer or seller depending on your order.
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