【投资学英文版课件】MARKETMECHANICS.pptVIP

MARKET MECHANICS Some market observers view the level of margin debt as a precursor of things to come with the market averages. As margin debt as increased, so has the level of stock prices, and vice versa. In the post-Enron/accounting scandal era, investors are likely to pay more attention to their investments and to perform a higher level of “due diligence” than in the past. 6 - * Strong C6 – Market Mechanics CHAPTER SIX Practical Investment Management Robert A. Strong Placing Orders: Order Information Flow Individual Investor Broker 1. Places order 4. Confirms trade Stock Exchange Brokerage Firm Accounting Operations 2. Submits order 3. Confirms trade 3. Confirms trade 5. Mails confirmation statement Placing Orders: Types of Orders Market orders are to be executed as soon as possible after reaching the exchange floor. Limit orders must specify a price and a time limit, e.g. “Buy 500 at $90, good till canceled.” A stop order differs from a limit order in that the order is only executed if the specified price, called the stop price, is touched. Stop orders become market orders when the stop price is reached. Placing Orders: Types of Orders The most important use of a stop order is to protect a profit. Moving a stop up behind a rising stock is called using a crawling stop order. Other orders: - once cancels the other - all or none - fill or kill - stop limit Placing Orders: Types of Orders Insert Figure 6-3 here. Placing Orders: Settlement Procedures The activities surrounding the transfer of ownership are called settlement procedures. In the United States, stock and bond transactions settle three business days after the trade date. A number of market speculators engage in a practice known as a day trade, which involves buying and selling securities on the same day. The Specialist and the Book Specialists help maintain a fair and orderly market. To tighten the spread in the market, specialists may actively participate in the ma