How does my stock broker find a seller when I request to buy shares of stock?
Wednesday, December 23rd, 2009 at
1:42 pm
I have never bought a stock before. I am reading about it. Let’s say I use Scott Trade. I call Scott Trade and say I want to buy 100 shares of XYZ. How does the broker at Scott Trade find someone who wants to sell 100 shares? Is there some type of a software program that my broker uses to find 100 shares of XYZ for sale? I always choose best answer, thanks for your time.
Tagged with: Broker • Find • request • seller • shares • Stock
Filed under: Forex EA
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Your bid for 100 shares is place up and then someone sends an amount which they are willing to offer their 100 shares for. Of course there could be people with lesser amounts to sell and the buyer (your broker) may have to buy from two or three different people at times to get your 100 shares.
Waaaay back in the day brokers would meet on the floor of the new york stock exchange and look around all day for someone who might want to sell his 100 shares of XYZ to you. More than likely it would have been some other broker who had a client that wanted to sell. The two brokers would meet up and exchange the paper.
Nowadays everything is done electronically. The trade is made over a network and then is sent through a clearing firm. The clearing firm makes sure that you have enough money in your account, and your seller really has the stock. Once they are sure of this, they subtract the cash balance from your account and add it to the seller’s account. They also subtract the stock from the seller’s account and add it to yours.
That’s pretty much it. Your broker must carry a license and will have an account set up on the network. For you to have access to this network, you open an account with your broker, your broker makes the trades, and you pay commissions. That’s pretty much how it works!
Its fantastic to see you are inquisitive about the process, but your focus is off.
Yes, all buyers and selllers submit their orders electronically, and then the computers at the brokerage house matches them. But, what you should really concern yourself with is the following:
Which stocks or mutual funds should you buy that have the level of risk you are comfortable with?
How many shares should you buy?
When should you buy? and when do you plot to sell under which circumstances?
Answer these questions if you want to succeed.
What to buy? Start with DIA – it is a mutual fund that tracks the well loved Dow Industrial Average.
When? Wait until a down day and buy low
When to sell? Wait until an up day and sell high
How many shares? Typically buy in round lots of 100 shares, but you can buy any amount you want, say 31 shares if that is what you want to risk.
Excellent luck!
When you place your order of 100 shares of XYZ to Scott Trade, they send it to the the appropriate stock exchange (NYSE, Nasdaq, etc.) where their computers match your Buy order to a Sell order of another investor that would come also come from a brokerage (Scott Trade or another). “Market” orders are simpler to match, and some brokerages guarantee to have it filled nearly instantaneously. Limit orders may take longer, depending upon the volumes and bid/question levels of the stock.
no, i am not agree
no, i am
Now a days all trading is based on computerised so dont worry about it just find your stock is liquid or not .(find out volume of the stock in a day).