Friday, September 26, 2008

Trade Execution: What all Investor need to understand

When you make an order to purchase or sell stock, you generally not think about where or how your broker will execute the bussiness. But this execution can impact the overall costs of the deal, including the price which pay for the stock. Here's what you should know about it.

It isn't an instant process:

Near about all investors who trade through online brokerage accounts ,they are thinking that they have a direct connection to the securities markets. But they don't. When you push that enter key, your order will go through the Internet to your broker - who in turn decides which market to send it to for execution. The same thing happens when you call your broker to place a trade.

While trade execution is usually and quick, it may take time. And prices can change quickly, especially in fast-changing markets. Because price quotes are only for a specific number of shares, investors may not always receive the price they saw on their screen or the price their broker quoted over the phone. By the time your order reaches the market, the price of the stock could be slightly - or very - different.

But if company advertise their speed of execution, they must not exaggerate or fail to tell investors about the possibility of significant delays. So you need to be very careful before choosing it.

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