The trading mechanism in the stock exchange involves the purchase and sale of securities. The trading is done by a broker who is trusted by the investor to get the best possible price. The broker must also settle the account and pay for the sold securities on time. It is important to understand the trading mechanism in the stock exchange before engaging in it.
Order driven market
An order-driven market is a market where the price of a given security is determined by a single order from a single firm. This kind of system works very well for retail order flows, such as those involving liquid stocks. However, these systems also require structural support to avoid collapse, especially when the market is under stress. Such stress can be caused by news and events such as the opening or closing of the market. It can also be caused by a large …
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