Trading Basics

Basic Steps in How Stock Trading Works

‘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 EMAAR for 100 AMLAK).

Trade = Buy or Sell

To "trade" means to buy and sell in the jargon of the financial markets. How a system that can accommodate one billion shares trading in a single day works is a mystery to most people. No doubt, our financial markets are marvels of technological efficiency.

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

You don't need to know all of the technical details of how you buy and sell stocks; however it is important to have a basic understanding of how the markets work. If you want to dig deeper, there are links to articles explaining the technical side of the markets.

Electronic Trading

The electronic markets use vast computer networks to match buyers and sellers, rather than human brokers. While this system lacks the romantic and exciting images of the floor trading, it is efficient and fast. Many large institutional traders, such as pension funds, mutual funds, and so forth, prefer this method of trading.

For the individual investor, you frequently can get almost instant confirmations on your trades, if that is important to you. It also facilitates further control of online investing by putting you one step closer to the market.

You still need a broker to handle your trades - individuals don't have access to the electronic markets. Your broker accesses the exchange network and the system finds a buyer or seller depending on your order.

Click here to know the flexible trading tools we offer at Al Dhafra Financial Broker.

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