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.
Category: Trading
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.,
Discount Brokers
A discount broker offers an execution service for a wide variety of trades. In other words, you tell them to buy, sell, short, or whatever, they do exactly what you requested, and nothing more. Their service is primarily a way to save money for people who are looking out for themselves and who do not
Day Trading, Margin and Free Ride Rules
This article discusses the basic mechanics of day trading, the free-ride regulations, and explains how traders use margin accounts to avoid violating those free-ride regulations. Day trading is the term applied to people who buy and sell stocks through the course of a day, rarely holding a stock overnight. You might be wondering just what
Brokerage Account Types
Brokerage houses offer clients a number of different accounts. The most common ones are a cash account, a margin account (frequently called a “cash and margin” account), and an option account (frequently called a “cash, margin, and option” account). Basically, these accounts represent different levels of credit and trustworthiness of the account holder as evaluated
Bid, Offer, and Spread
If you want to buy or sell a stock or other security on the open market, you normally trade via agents on the market scene who specialize in that particular security. These people stand ready to sell you a security for some asking price (the “offer”) if you would like to buy it. Or, if
After Hours Trading
After-hours trading has traditionally referred to securities trading that occurs after the major U.S. exchanges close. Until 1999, after-hours trading in the U.S. was mostly restricted to big-block trading among professionals and institutions. Much of this sort of trading was supported by electronic trading networks (ECNs). One of the oldest and best known ECN is
Stock Trading
This article offers a very basic introduction to stock trading. It goes through the steps of buying and selling shares, and explains the fundamental issues of how an investor can make or lose money by buying and selling shares of stock. This article will simplify and generalize quite a bit; the goal is to get