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Trading > Trading Basics > Flashcards

Trading Basics Flashcards

1
Q

First Market

A

Trading on exchange floors

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2
Q

What are the 5 regional exchanges?

A 
Chicago
Pacific
Philadelphia
Boston
Cincinnati
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3
Q

CQS

A

Consolidated Quotations Service; provides current price quotes for NYSE and NYSE-MKT securities

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4
Q

Network A Tape

A

CQS feed that reports NYSE issues

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5
Q

Network B Tape

A

CQS feed that reports NYSE-MKT issues; also reports regional exchange trades

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6
Q

Network C Tape

A

NASDAQ issues

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7
Q

Second Market

A

Over the counter

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8
Q

OTCBB

A

Over the Counter Bulletin Board; displays quotes for companies not on exchanges

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9
Q

Pink OTC Markets

A

speculative stocks & delisted companies; also some foreign companies

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10
Q

Third Market

A

OTC trading of exchange listed securities

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11
Q

Benefits of third market

A

Compete with exchanges; offer competitive prices and are open 24hrs

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12
Q

Payment for order flow

A

Portion of payment for a trade returned to buyer

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13
Q

Fourth Market

A

direct trading of securities between institutions

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14
Q

ECN

A

electronic communications networks; match buy and sell orders 24/7

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15
Q

Regulation ATS

A

Required ECNs to register with SEC as brokers; if market share is > 5% for a security must also publicly display orders

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16
Q

Regulation NMS

A

National Market Securities; set of rules that govern securities trading

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17
Q

Rule 602

A

Exchanges must collect and display bids and offers

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18
Q

Rule 604

A

Limit Order Display Rule; exchanges must display all orders so the best price is seen

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19
Q

Rule 605

A

Market Center Order Execution Report; requires monthly report that summarizes order execution

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20
Q

Rule 606

A

Requires firms to report to customers the details of order routing and payment for order flow

21
Q

Rule 607

A

Requires firms to notify customers of order flow policies

22
Q

Rule 611

A

Requires that exchanges execute a trade at the best price across all markets that issue is tradign

23
Q

Trade Through

A

when a trade is completed at an inferior price; unlikely to happen now due to electronic trading and rule 611

24
Q

Rule 610

A

Requires exchanges to offer automatic execution of trades and the same speed of trading to all users

25
Q

Rule 612

A

no sub-penny quotes on NMS stocks trading at $1 or more

26
Q

Sub-penny quotes

A

ECN allow quoting stocks in sub-penny increments; creates hidden market

27
Q

What is a dealers spread?

A

Difference between bid (what they will buy at) and ask (what they will sell at) prices

28
Q

Specialist/DMM

A

5 specialist firms handle act as dealers for all NYSE issues; also called DMMs: Designated Market Makers

29
Q

NYSE vs NASDAQ dealers

A

NYSE: 5 specialist firms act as dealers for all issues, cannot deal with public
NASDAQ: multiple competing market makers, can work directly with public

30
Q

How do dealers work on the second market?

A

Second market prices are negotiated due to no centralized electronic quote resource

31
Q

How do brokers make money?

A

Via commission

32
Q

How do dealers make money?

A

Via mark-up

33
Q

Regulation SHO

A

Covers short sales; requires that a broker must have shares on hand to cover the short sale

34
Q

GTC

A

Good til cancelled; most orders cancelled at the end of the day if not fulfilled; customer can indicate GTC in which case the order stays in the system

35
Q

AON

A

All or none: either entire order is filled or nothing; trader is free to attempt again later

36
Q

FOK

A

Fill or kill; order filled on the first try or not at all

37
Q

IOC

A

Immediate or Cancel: part of all of the order is filled on the first try or is cancelled

38
Q

Not held

A

Tells the trader to determine when to make the trade if they think a better price will happen later in the day

39
Q

Limit order

A

specifies a price that is to be hit when selling or buying an order

40
Q

Market Order

A

filled immediately at market price

41
Q

Open Buy Stop

A

Says to buy a stock at a certain price, but does not trigger until that price is reached. Allows a buy order to be placed above the market rate to hedge a short stock position

42
Q

Open Sell Stop

A

Says to sell a stock at a certain price, but does not trigger until that price is reached. Allows a sell order to be placed below the market rate to hedge a long stock position

43
Q

Open Buy Limit

A

Says to buy a stock if the market falls to a certain limit

44
Q

Open Sell Limit

A

Says to sell a stock if the market rises to a certain limit

45
Q

What is resistance level?

A

The price a stock seems to hit that triggers investors to sell their shares

46
Q

Is a breakout of the resistance level bullish or bearish?

A

Bullish because it indicates that there are more buyers than sellers

47
Q

What is the support level of a stock?

A

The price a stock hits that triggers investors buying it

48
Q

Is a breakout of the resistance level bullish or bearish?

A

bearish because it indicates there are more sellers than buyers

49
Q

UQDF

A

UTP Quote Data Feed; displays NASDAQ quotes

Trading (3 decks)

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