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Markets & trading
What happens when prices move and trades meet in a market.
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Markets & trading
What is the bid/ask spread?
The bid is the best current buying price. The ask is the best current selling price. The gap is the spread.
Markets & trading
Market orders
A market order prioritises execution against available prices rather than setting a maximum purchase or minimum sale price. It is an instruction to trade, not a guarantee of the last quoted price.
Markets & trading
Limit orders
A limit order sets the worst price the trader will accept: no more than the limit when buying and no less when selling. Price control is gained by accepting execution uncertainty.
Markets & trading
Stop and stop-limit orders
A stop order activates after a trigger price is reached; a stop-limit then submits a limit order instead of an unrestricted market order. Triggering and execution are separate events.
Markets & trading
Market liquidity
Market liquidity is the ability to trade a useful quantity promptly without moving the price greatly. It depends on size, cost, speed and current market conditions.
Markets & trading
Trading volume
Trading volume is the quantity of shares, contracts or units exchanged during a defined period. It measures activity, not whether buying or selling pressure was correct.
Markets & trading
Market depth
Market depth is the quantity available to buy or sell across multiple price levels in an order book. It shows more than the best bid and ask but remains a changing snapshot.
Markets & trading
Pre-market trading
Pre-market trading occurs before an exchange's main regular session under specific venue and broker rules. Participation and liquidity are often lower than during normal hours.
Markets & trading
After-hours trading
After-hours trading occurs after the regular session closes under extended-hours rules. It can process new information while offering less depth and wider spreads.
Markets & trading
The trading session
A trading session is a defined period during which a venue accepts and matches eligible orders. Opening, continuous, auction and extended phases can use different rules.
Markets & trading
Before market open and after market close
BMO means before market open. AMC means after market close. The label tells you which regular session first had the news.
Markets & trading
The market open and close
The market open and close are rule-based transition points, often set through auctions that combine orders into a single clearing price. They are not merely the first and last random trades.
Markets & trading
Market indices
A market index is a rules-based measure of a selected group of securities. Its constituents, weights and calculation method determine what its movement represents.
Markets & trading
Sectors and industries
Sectors and industries group companies by related economic activity. The hierarchy helps comparison, but classification systems and diversified businesses create imperfect boundaries.
Markets & trading
Bull and bear markets
Bull and bear markets are informal labels for substantial rising or falling market phases. Thresholds and start dates vary, so the label must be tied to an index and convention.
Markets & trading
Short selling
Short selling usually borrows an asset, sells it, and later buys it back to return the borrowed units. The position gains if the repurchase cost is lower, before fees and other obligations.
Markets & trading
Options basics
An option is a time-limited contract giving its buyer a right, but not an obligation, under defined terms. Calls relate to buying the underlying; puts relate to selling it.
Markets & trading
Futures basics
A futures contract is a standardised agreement to exchange or financially settle an underlying exposure at a future date. Both sides carry obligations and post margin.
Markets & trading
Initial public offerings
An initial public offering, or IPO, is the first broad public sale and listing of a company's shares under a formal offering process. It creates public price discovery and disclosure obligations.
Markets & trading
Secondary share offerings
A secondary share offering sells additional shares after a company is already public. It may raise new company capital, sell existing holders' shares, or combine both.
Markets & trading
Market makers
A market maker regularly quotes prices at which it is prepared to buy and sell under venue or commercial arrangements. It supports immediacy while managing inventory and information risk.
Markets & trading
Price discovery
Price discovery is the process through which orders and trades combine dispersed information, needs and constraints into market prices. It is continuous and can be noisy or temporarily impaired.
Markets & trading
Trading slippage
Slippage is the difference between a reference price and the price actually achieved, under a stated sign convention. It reflects market movement, spread, depth, latency and order design.
Markets & trading
Transaction costs
Transaction costs are the explicit and implicit costs of entering, changing or exiting a position. They include fees, taxes, spread, market impact and sometimes financing or currency conversion.
Markets & trading
Volatility halts and circuit breakers
A volatility halt or circuit breaker pauses or constrains trading when defined conditions are met. It creates time for orders and information to regroup; it does not fix a price.
Markets & trading
Trade settlement
Trade settlement is the completion stage when securities and cash are delivered under market rules. The trade is agreed first; legal and operational completion follows on the settlement schedule.
Markets & trading
Corporate actions
Corporate actions are company events that change securities, cash entitlements or ownership terms. They can be mandatory, voluntary or offer choices to eligible holders.
Markets & trading
The ex-dividend date
The ex-dividend date is the first date a purchase normally no longer carries the right to a declared dividend under the market's settlement rules. Eligibility depends on the official timetable.
Markets & trading
Record and payment dates
The record date is when the issuer checks its ownership records for an entitlement; the payment date is when cash or securities are distributed. Trading settlement links eligibility to earlier dates.
Markets & trading
Ticker symbols
A ticker symbol is a venue-specific short identifier for a security. It is convenient for display but not globally unique and can change or be reused.
Markets & trading
Primary and secondary markets
The primary market creates and sells new securities to raise capital; the secondary market lets investors trade existing securities with one another. The cash recipient differs between them.
Markets & trading
Exchange-traded and over-the-counter markets
Exchange-traded markets use a central venue and standard rules; over-the-counter markets involve dealer or bilateral networks. Transparency, standardisation and counterparty arrangements differ.