How Stocks are Traded

Trading stocks means buying or selling stocks 

There are two basic forms of purchasing and selling stocks available to be used. These two ways to trade stocks include Electronically and on the exchange floor. In the past few years there has been a push to do more things electronically to make the trading floor less hectic. Although it has been met with resistance it is making head way. 

On the Floor Trading Process: First off, you’d make an order for your stock broker to process. Let’s say you’re buying 5 shares of a company. Your broker’s order section would send the order to their clerk on the floor. The floor clerk would then find another floor clerk who is looking to sell 5 shares of said company. Then the two will agree on a price and strike up the deal. It goes back up the line and your broker will contact you with a final price. A few days later and you shall receive a confirmation notice in the mail. Be aware that some trades may be more complex and take much more time. The key to this method is locating a stock broker who won’t eat up any profits you may make.

Electronically: This method won’t have all the pretty chaos of a trading floor like you’re used to seeing in movies and on TV. This system is a much quicker and efficient method that involves using computer networks to match buyers and sellers sometimes instantly. Sadly, though you will still need a broker because you don’t have direct access to the market. However, this is personally my favorite way of trading. Several banks have fantastic trading systems and are very easy to open a brokerage account with.