The previous day’s close, as well as any after-hour trading in a security may have significant effects on the opening price, but that isn’t the whole story. Here’s a quick summary of how the process for determining the opening price works. The basic problem is that the closing price from the previous trading day is
Over The Counter (OTC) Stock Trading
How to Trade Stocks Off Exchange Anyone can trade stocks off the current set of stock exchanges, if only on a person-to-person deal. This is not a far cry from the original trading under the Buttonwood tree in New York in the 18th century. Today, over 20% of the total volume on stocks traded on
Can Non-US Citizens Trade US Stocks?
Non-Resident Aliens and US Exchanges It is perfectly legal for non-resident aliens to trade equities on exchanges in the United States using US brokerage houses directly. (A “non-resident alien” (NRA) is the US government’s name for a citizen of a country other than the US who also lives outside the US.) The current surge in
How to Buy and Sell Stock Without a Broker
Yes, you can buy/sell stock from/to a friend, relative or acquaintance without going through a broker. Call the company, talk to their investor relations person, and ask who the Transfer Agent for the stock is. The Transfer Agent is the person who accomplishes the transfer, i.e., by issuing new certificates with the buyer’s name on
NASD Public Disclosure Hotline
The number for the NASD Public Disclosure Hotline is (800) 289-9999. They will send you information about cases in which a broker was found guilty of violating the law. I believe that the information that the NASD provides has been enhanced to include pending cases. In the past, they could only mention cases in which
Stock Trading Glossary
Stock Trading Jargon and Terminology Some common jargon that you should understand about trading equities is explained here briefly. See other articles in the FAQ for more detailed explanations on most of these terms. AON, “all or none” A buy or sell order with this designation loses normal order priority if the amount of shares
Introducing Broker (IB)
An Introducing Broker (IB) is a futures broker who delegates the work of the floor operation, trade execution, accounting, etc. to a Futures Commission Merchant (FCM). In this relationship, the FCM maintains the floor operation and the IB maintains the relationship with retail clients. This is efficient because the work of a floor operation vs.
Insider Trading
Insider trading refers to transactions in the securities of some company executed by a company insider. Although a company insider might theoretically be anyone who knows material financial information about the company before it becomes public, in practice, the list of company insiders (on whom newspapers print information) is normally restricted to a moderate-sized list
Electronic Stock Trading
All brokerage houses now have web sites and accept orders online because it allows them to cut costs and compete for your business with low commissions. Some on-line brokerages require a significant cash balance, even as much as $10,000, before you can place trades. Here’s a few web resources with more information: The Securities and
Dividend Reinvestment Plan (DRIP)
DRIP stands for Dividend (sometimes Direct) ReInvestment Plan. The basic idea is that an investor can purchase shares of a company directly from that company without paying any commission. This is most commonly done in a traditional DRIP by having all dividends paid on shares immediately used to purchase more of the same shares (i.e.,