Stock trading is a sort of misleading term to that is used
to describe what in fact takes places when you are buying or selling stocks. Like
most financial markets, the stock market is very efficient, and practically
obeys the supply and demand laws.
If you want to sell a stock share, at the right price, someone
was always ready to buy that share from you. For all of the trades that take
place each day, the stock exchanges all through the world bring order ensuring
that buyers and sellers can find each other quickly.
Stock Exchange Floor
Most people have in their minds the New York Stock Exchange in
the picture when they think of trading stocks.
That's for the reason that in
order to complete their stock transactions, they still use an exchange floor
where the "market makers" still use hand terminals or pads, overhead
monitors and hand gestures.
To match up the buyers and sellers and ensure that a robust
"market" always exists for the stock or stocks that they are accountable
for, the NYSE depends on these specialists or market makers.
It is quite a remarkable
sight to see the NYSE trading floor and all of the people that make trading a
reality - and that is why you see pictures of the stock exchange floor in
the newspaper all the time.
Electronic Stock Exchanges
The NASDAQ is a complete electronic exchange unlike the NYSE
- and pictures of computers are pretty boring. In order the match buyers and
sellers of stock.
The NASDAQ uses a sophisticated network of computers. With
almost instantaneous confirmation of stock trades, this makes electronic
exchanges very fast.
An added feeling of control over their trades was given by
the electronic exchanges to many investors, but the necessity of the
stockbroker is still essential in either method - exchange floors or electronic
exchanges.
Stock Trades and Stock Brokers
You do not have direct access to the stock market as an
individual. Stock brokers are the one who used to ensure the exchange rules are
enforced and, in order to complete their transactions, all stock traders must have
the essential funds.
So, the stock broker provides the market and the investor
with essential services irrespective of whether you are online day trading or
calling a stock broker over the telephone. And the more personal this service
is, the higher the commission you will be charged.
For example, an amount of $30.00 might be charged by stockbrokers
that answer the telephone and make trades on your behalf. This is a
generalization, actual fee structures may differ with the dollar amount or
number of shares traded.
Electronic Stock Brokers
Electronic Stock Brokers let you to make online trades by
means of an account you've established with them.
In order to send your buy and
sell order, these companies also use sophisticated computer networks to the
correct stock exchange. This means that depending on price or commissions, not
personalized service, electronic brokers compete for your business.
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