It's good to know the ABC of trading, including the process of it. Stock market and retail are two different thing, e.g: Stock markets operation are auction-type, where both buyers and sellers are actively setting the price, and retail price are only set by seller.
So how does the stock market price work? Buyers and sellers set the price which is 'bid price' and 'ask price'.
Bid price is the price which buyers are willing to buy the shares. Ask price is the price which sellers are willing to sell their shares. Both bid and ask price are rarely the same, generally the bid are slightly lower than ask price. The differences between both will go to the broker as profit.
There are few types of trading style you can use when it comes to executing your trades. The types of trading are:
Market Orders: As mentioned above, you tell your broker to purchase or sell a specified quantity of stock at the prevailing market price. These are often the lowest-commission trades because they involve very little work on the broker's part.
Limit Order: You tell your broker to buy a security at or below a specified price, or to sell a security at or above a specified price. This ensures that you will never pay more for the stock than whatever price you set as your "limit."
Stop Order: You tell your broker to buy a security at the market price once it reaches a level higher than the current market price. The opposite would be true if you were selling: you would tell your broker to sell your security once it reaches a level below the current market price.
Fill or Kill: You tell your broker to execute the trade immediately; if the trade is not filled right away then your broker does not execute the order.
Day Order: You tell your broker to execute the trade by the end of the day; otherwise, he or she does not fill the order.
