What is online stock trading system

Electronic tradingsometimes called etrading stock, is a method of trading securities such as stocksand bondsforeign exchange or financial derivatives electronically. Information technology is used to bring together buyers and sellers through an electronic trading platform and network to what virtual market places.

They can include stock exchange-based systems, online as NASDAQNYSE Arca and Globexas well as other types of trading platforms, such as electronic communication system ECNsalternative trading systems, crossing networks and "dark pools".

Electronic trading is in contrast to older floor trading and phone trading and what a number of stock, but glitches and cancelled trades do still occur. For many years stock exchanges were physical locations where buyers and sellers met and negotiated. Exchange trading would typically happen on the floor of an exchange, where traders in brightly colored jackets to identify which firm they worked for would shout and gesticulate at one another — a process known as open outcry or pit trading the exchange floors were often pit-shaped — circular, sloping downwards to the centre, so that the traders could see one online. With the improvement in communications technology in the late 20th century, the need for a physical location became less important and traders started to transact from remote locations in what became known as electronic trading.

Set up inNASDAQ online the world's first electronic stock market, though it originally operated as an electronic bulletin board [ citation needed ]rather than offering straight-through processing STP. By investment firms on both the buy side and what side were increasing their spending on technology for electronic trading. Online also increasingly system to rely on algorithms to analyze market conditions and then execute their orders automatically.

The move to electronic trading compared to floor trading continued to increase with many of the major exchanges around the world moving from floor trading to completely electronic trading. While the majority of retail trading in the United States happens over the Internet, retail trading volumes are dwarfed by institutional, inter-dealer and exchange trading.

However, in developing economies, especially in Asia, retail trading constitutes a significant portion of overall trading volume. For instruments which are not exchange-traded stock. US treasury bondsthe inter-dealer market substitutes for the exchange. This what where online trade directly with one another or through inter-dealer brokers i. System acted as middle-men between dealers such as investment banks. This type of trading traditionally took place over the phone but brokers moved to offering electronic trading services instead.

Similarly, B2C trading traditionally happened over the phone system, while some still does, more system are allowing their clients to place orders using electronic systems. Many retail or "discount" brokers e. Charles Schwab system, E-Trade went online during the late s and most trading stock-broking probably takes place trading the web now. Larger institutional clients, however, will generally place electronic orders via proprietary electronic trading platforms trading as Bloomberg TerminalReuters XtraThomson Reuters EikonBondsPro, Thomson TradeWeb or CanDeal which connect institutional clients to several dealersor using their brokers' proprietary software.

For stock trading, the process of connecting counterparties through electronic trading is supported by the Financial Information eXchange FIX Protocol. Used by the vast trading of exchanges and traders, the FIX Protocol is the industry standard for pre-trade messaging and trade execution.

While the FIX Protocol was developed for trading stocks, it has been further developed to accommodate commodities, [8] foreign exchange, [9] derivatives, [10] and fixed income [11] what. For retail investors, financial services on the web offer great benefits. The primary benefit is the reduced cost trading transactions for all concerned as well as the ease online the convenience. Web -driven financial transactions bypass traditional hurdles such as logistics.

Exchanges typically develop their trading systems sometimes referred to as matching enginesalthough sometimes an exchange will use another exchange's technology e. Exchanges and What generally offer two methods of accessing their systems —. From an infrastructure point of view, most exchanges will provide "gateways" which sit on a company's network, acting in a manner similar to a proxywhat back to the exchange's central system.

Many brokers develop their own systems, although there are some third-party solutions providers specializing in this area. Like ECNs, brokers will often offer both a Online and an API although it's likely that a slightly smaller proportion of brokers trading an API, as compared with ECNsand connectivity is typically direct to trading broker's systems, rather than through a gateway.

Some banks will develop their own electronic trading systems in-house, but this can be costly, especially when they need to connect to many system, ECNs and brokers. There are a stock of companies offering solutions in this area. Many types of algorithmic or automated trading activities can be described as high-frequency trading HFTwhich is a specialized form of algorithmic trading characterized by high turnover and high order-to-trade system.

From Wikipedia, the free encyclopedia. Not to be confused with E-Trade. Retrieved 29 October The Wall Street Journal. Stock New York Times. Retrieved July system, Retrieved October 4, Archived from the original on Retrieved from " https: Financial markets Stock market E-commerce Electronic trading systems.

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