Buying and selling stock: how the stock market works
Of the many possible investment decisions, one option is to trade in the stock market. But, how? When can a trade take place? What instructions do you need to give your broker? Does the amount traded matter? BBVA Trader provides training that helps users make decisions that best fit their investor profile.
BBVA Trader, the platform BBVA launched last December, offers all the services and contents that the users with a trader and heavy-trader profile look for in a trading platform. BBVA Trader lets users trade stock, warrants and ETFs and offers extensive training that covers everything from the most basic, to the most advanced concepts.
Once the decision has been made to trade stock, the next step is to define the investment to be made and where to do it. Research and information are essential to operating in financial markets. Identifying the companies, sectors or attractive regions in which you want to invest is fundamental. BBVA Trader makes this easier by providing objective information on all markets, and in real-time.
Stock exchange
Like any market, in the stock market there are buyers who are willing to exchange money for shares. They represent demand in the market, or colloquially, “the money” willing to buy shares. There are also the sellers, who want to obtain money in exchange for the stock they own. They represent supply in the market – or in stock market slang, “the paper” - the shares up for sale. When supply and demand coincide, a trade takes place.
A broker’s role is fundamentally to buy and sell shares on behalf of their customers
Unlike a traditional market where the buyer and seller perform the transaction in person, in the financial market a third party is needed – an intermediary called a broker. This figure transmits the interests of the stock market participants to the order book. Here, the broker specifies the amount and price that each participant is willing to pay or receive for their shares.
Entries in the order book are known as “market depth”. It lists all the limit orders with prices close to the last price in the market.
Types of basic orders
There are two types of basic orders. Market orders involve giving an immediate order to buy or sell at the best price available. And limit orders are orders to buy at a set price, or better. They establish the maximum price an investor will pay, or the minimum price that will be accepted for a sale.
It’s important to take into account that the stock market has a limited schedule when trades can take place. In Europe, markets are open from Monday to Friday, from 9:00AM to 5:30PM, and in the U.S., from 9:30AM to 4:00PM EST.
For more information visit BBVA Trader, an advanced, agile and user-friendly platform with prices adapted to your level of operations.