Buying and selling drive financial markets. Every trade involves either purchasing an asset or selling one you already own. Knowing how buying and selling works helps you trade confidently and manage your positions effectively.
How Orders Work in Trading
When you decide to buy or sell, you place an order through your trading platform or broker. There are different order types to choose from. Market orders execute immediately at the current market price, while limit orders let you specify a price to buy or sell. The order only executes if the market reaches that price. This process is a key part of how buying and selling works in practice.
Order Matching and Trade Execution
Once you place an order, the market pairs it with a counterparty’s order. The execution price is where your trade completes. Execution speed and price depend on market liquidity and order type. Market makers and liquidity providers help ensure buyers and sellers are always available, which supports how buying and selling works.
How Brokers Support Buying and Selling
Brokers play an essential role in how buying and selling works by providing platforms, facilitating order execution, and offering support. Their services help ensure your trades run smoothly and your understanding of the buying and selling process improves.
Trade Confirmations and Settlements in Buying and Selling
Trade confirmations and settlements complete how buying and selling works. Once your order executes, you receive confirmation details, and the settlement process transfers asset ownership and funds, finalising the trade within a few days.
Understanding the fundamental processes behind buying and selling is essential for making informed and successful trading decisions. It allows you to set realistic expectations for order execution and to plan your trades with greater confidence and precision. Next, we’ll explore trading spreads and their impact on trading costs and profitability.