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Flashcards in trading securities Deck (36):
1

what are the 4 secondary trading markets?

-exchanges
-over the counter
-third market
-fourth market

2

describe exchange trading

-listed securities
-trade at physical location
-trade on an auction market

3

describe over the counter trading

-not listed securities
-no physical location
-trading is negotiated between buyer and seller

4

describe third market trading

-listed securities traded OTC
-no physical location
-trading is negotiated between buyer and seller

5

describe fourth market trading

-listed and unlisted securities
-direct trading between financial institutions
-use ECNs to trade

6

describe dark pool trades

-private trading done on the fourth market after hours by institutions
-instinet

7

what are two types of ECNs

-superdot - nyse
-instinet - 4th market institutions

8

describe floor brokers

broker working for an individual broker/dealer on the exchange floor

9

describe two-dollar brokers

employees of nyse who help other brokers on floor and charge fees for their assistance

10

describe a specialist

designated market maker (DMM)
-buy and sell to make market move
-maintains fair and orderly market
-provide liquidity

11

what is a market order

are orders that are executed immediately at best available price

12

market orders are guaranteed to be ___, ___ is not guaranteed.

-filled
-price

13

what order are market orders filled?

1st-priority-time
2nd-precedence-size
3rd-parity-heads or tails

14

when are limit orders executed?

they are executed at a specified price or better

15

describe a buy limit

buy for $20 or better
-entered below CMV
-no fill guarantee

16

describe a sell limit

sell for $20 or better
-entered above CMV
-no fill guarantee

17

purpose of stop orders

-provide protection
-limit losses (called "stop loss" orders)

18

describe buy stop orders

buy @ 35 stop
-triggered @ 35
-become market order and executed at next price
-entered above CMV
-PROTECTS SHORT POSITION

19

describe sell stop orders

-sell @ 35 stop
-triggered @ 35
-become market order and executed at next price
-entered above CMV
-PROTECTS LONG POSITION

20

describe buy stop limit orders

-buy @ 25 stop limit 26
-25 if trigger price
-order will be filled at 25 but not more than 26
-entered above CMV

21

describe sell stop limit orders

-sell @ 25 stop limit 24
-25 is trigger price
-order will be filled at 25 but no less than 24
-entered below CMV

22

cheat for remembering if orders are filled above or below the CMV

SLoBS
BLiSS

sell limits and buy stops
buy limits and sell stops

23

describe day orders

cancel any unexecuted portion at end of the day

24

describe GTC (good till cancelled) orders

any unexecuted portion remains working until the last trading day of April or October

25

describe Fill or Kill (FOK) orders

entire order executed immediately or entire order is cancelled

26

describe immediate or cancel (IOC) orders

-execute any portion available immediately
-cancel any balance remaining

27

describe all or none (AON) orders

-execute all if available
-become a GTC order if not all of order can be filled

28

describe market at open orders

-execute orders at or near the open of the day
-not guaranteed exact opening price

29

describe market at close orders

-execute orders at or near the end of the day
-not guaranteed exact closing price

30

describe market not-held orders

held by floor broker having time and price authority
-order not guaranteed

31

specialists (DMM) order display books contain?

-limits (high bid price/low ask price)
-stops and stop limits

32

describe the 3 market halts

based on declines in the S&P 500
-level 1-7% decline = 15 min halt
-level 2-13% decline = 15 min halt
-level 3 -20% decline = market done for day

33

what kind of securities trade OTC?

-unlisted stocks and bonds
-govt securities
-municipal securities

34

describe principal market makers

-maintain inventory
-maintain liquidity
-mark up or down
-charges not disclosed

35

describe agents as a non-market makers

-represents clients
-charge commission
-charges are disclosed

36

describe the markup policy

usually 5%
-guide for listed and unlisted transaction charges
-markup policy can vary depending on the effort used to finalize deal