Stop order 1 becomes order if price reaches specified

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Unformatted text preview: top Order 1. Becomes order if price reaches specified price 2. No guarantee of execution at specified price All Rights Reserved Dr. David P Echevarria 4 MARKET TRADING DYNAMICS MARKET D. Long Position D. 1. 2. 3. Expectation - market heading higher Purchase stock via market order at the Ask Purchase market Purchase stock via limit order at specified price D. Selling Short 1. 2. 3. 3. 4. Expectation - market heading lower Stock borrowed from broker Stock Profits on drop in prices NYSE uptick rule discontinued All Rights Reserved Dr. David P Echevarria 5 MARKET TRADING DYNAMICS MARKET F. F. Block Trade 1. 2. F. Program Trading 1. 2. 3. 4. 5. F. Purchase or sale of 10,000+ shares NYSE Allows block trades away from floor Computer generated buy/sell decisions Quick reaction to mispricing or momentum Index arbitrage most popular motivation May exaggerate market moves – use of "collars" May trade ahead of small orders- front running Electronic Communication Networks (ECN) 1. 2. Electronic trading between direct access brokers Increases order execution, liquidity All Rights Reserved...
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