HOW DOES AN INVESTOR PURCHASE STOCK?
Here, in two steps, is what happens when an investor decides to buy or sell a particular stock. First, an account executive at the brokerage house receives the buy or sell order, which may take any of several forms: • Round-lot order. An order to buy or sell 100 shares, considered the standard trading unit • Odd-lot order. An order to buy or sell fewer than 100 shares • Market order. An order to buy or sell at the best available price • Limit order. An order to buy or sell at a specified price • Stop order. An order designated to protect profits or limit losses by calling for sale of the stock when its price falls to a specified level • Good till canceled order (GTC). An order that remains open until it is executed or canceled by the investor Second, after the order is received, it is sent to the floor of the stock exchange. The brokerage firm’s floor broker receives the order and executes it at the appropriate trading post. Confirmation of the transaction is reported back to the accou
