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Tuesday, August 1, 2017

Stock traders and order types

Stock Traders:

Before investors can trade listed or unlisted securities on the Egyptian exchange , investors must open a trading account with one of the licensed members or brokerage firms , all members trading (stocks , bonds , close-ended mutual funds) must trade via EGX electronic trading system , which receive orders of the members and send confirmation back to the member firm .

Order types:

A market order does not guarantee the price you will get, but it does guarantee that you will get the number of shares that you want. When an order is completed, it is said to be filled. A market order is most often used in cases where the buyer or seller is most concerned with filling the size of the order and not concerned with the price.

A limit order specifies the price at which you want to trade. A limit order can also be designated all-or-none (AON), meaning that you won’t agree to buy your shares unless you can get all size that you want.Limit orders are used by those who are primarily concerned with the price they want to receive, but they are not guaranteed that the size of their order will be filled. Price versus getting filled on the size of your order are the primary trade-offs between market and limit orders.

Stop orders are contingent on a certain price level being attained to activate the trade. With a stop order, your trade will be executed only when the security you want to buy or sell reaches a particular price (the stop price). Once the stock has reached this price, a stop order essentially becomes a market order and is filled.

This type of order can also be used to guarantee profits. Stop orders are particularly advantageous to investors who are unable to monitor their stocks for a period of time, and brokerages may even set these stop orders for no charge.

One disadvantage of the stop order is that the order is not guaranteed to be filled at the preferred price the investor states. Once the stop order has been triggered, it turns into a market order, which is filled at the best possible price. This price may be lower than the price specified by the stop order.

An immediate-or-cancel (IOC) order is cancelled if the order isn’t executed right away. This is typically used in conjunction with a limit order.
When an IOC order is combined with an AON order, it is designated fill-or-kill (FOK).
A day order is a limit or stop order that is cancelled at the end of the trading day, and will not be active the next morning.
A good-til-canceled​ (GTC) order is active until the instruction is given to cancel it, and may remain active

 OPR program
  • EGX offers an in-house developed OPR program that deals with the IPO's and private placements before execution in the market. This program facilitates orders' registrations and cancellations, assures accurate calculations of the allocation percentages and enables the market to absorb efficiently the surge in the amount of placements.

Kinds of stock trader

Being a stock trader you have to decide what kind of stock trader you want to become. The right fit depends on personality, time availability, and capital investment.

·         Growth-centered trading involves the practice of buying stock in companies that are poised to grow and expand their profits. This type of trading might focus on investing in new companies, which offer rapid growth potential. As a company grows, the value of its stock will rise, bringing the stock trader profits. Growth-centered trading may include potentially risky ventures like buying into a business IPO (Initial Public Offering).
·         Value-focused investing is one in which traders are on the lookout for underpriced stocks at companies that have the potential to perform better than their stock price seems to indicate. One way is to find companies that have significantly lower stock prices than that of their major competitors. It is important to ensure that the company in question has not manipulated its dealings to make the stock price fall instead of rise. Once honesty and integrity are established, along with the fact that the company’s share price is undervalued, the value trader is now in a position of less risk.
·         Income-oriented investing is the most conservative of common stock trading strategies. In income-oriented trading, the focus is on capital preservation, with low price fluctuations being of the utmost importance. Since a steady income is the objective, an income-oriented investing style will focus on the biggest and best-known companies, to be in lower risk ,This lower risk can be established by using bonds and time deposits as well as targeted investments in selected equities.
Buy and sell shares

The mechanics of buying or selling shares is fairly uniform. First, a stock quote is obtained. In the early days of stock exchanges, price information was transmitted via tickertape​ – a long ribbon of paper that printed basic data via telegraph wire. That is why today we still refer to stock quotes as the ticker.

A stock quote carries a lot of information including the current bid and offer (sometimes called the ask) prices as well as the last price that traded. The bid is the highest price that somebody in the market is willing to pay at a given time, while the offer is the lowest price that somebody is willing to sell. If you are interested in buying shares, you will make a bid, and if you want to sell an offer. When the price of a bid and offer coincide, a trade is effected.

The world has many stock exchanges and many investors. An understanding of the following rule makes for simplification: “For every one buyer there must be one seller” One must pay attention to complex rules governing matters like money management, risk management and trade management rules.You should be flexible enough to use several different types of strategies in your market system and your business plan, so that you can adjust to the market, be it bearish, bullish or even range bound.

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