Trading stocks for dummies

Trading stocks for dummies

Financial Stocks

In other languages:

Negociar Açõesторговать акциямиcomprar y vender acciones交易股票Mit Aktien handelnScambiare Azioninégocier des actions en bourse

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Stock Trading for Kids Students and Beginners

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Trading stocks. You hear that phrase all the time, although it really is wrong – you don’t trade stocks like baseball cards (I’ll trade you 100 IBMs for 100 Intels).

Trade = Buy or Sell

Yet, they still must handle your order for 100 shares of Acme Kumquats with the same care and documentation as my order of 100,000 shares of MegaCorp.

Two Basic Methods

There are two basic ways exchanges execute a trade:

  • On the exchange floor
  • Electronically

Exchange floor

When the market is open, you see hundreds of people rushing about shouting and gesturing to one another, talking on phones, watching monitors, and entering data into terminals. It could not look any more chaotic.

Yet, at the end of the day, the markets work out all the trades and get ready for the next day.

Here is a step-by-step walk through the execution of a simple trade on the NYSE.

  1. You tell your broker to buy 100 shares of Acme Kumquats at market.
  2. Your broker’s order department sends the order to their floor clerk on the exchange.
  3. The floor clerk alerts one of the firm’s floor traders who finds another floor trader willing to sell 100 shares of Acme Kumquats. This is easier than it sounds because the floor trader knows which floor traders make markets in particular stocks.
  4. The two agree on a price and complete the deal. The notification process goes back up the line and your broker calls you back with the final price. The process may take a few minutes or longer depending on the stock and the market. A few days later, you will receive the confirmation notice in the mail.

Of course, this example was a simple trade, complex trades and large blocks of stocks involve considerable more detail.


In this fast moving world, some are wondering how long a human-based system like the NYSE can continue to provide the level of service necessary.


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