How to buy a stock
As mentioned a while ago, stocks are traded on an exchange.
It’s not like Forex where it’s over-the-counter or forwards where you and the broker are trading within one another.
When you trade or buy stocks, you go through your broker, and your broker will then link to an exchange as shown here…
So, whenever you want to buy a stock, it goes to your broker and your broker routes your order to the exchange.
Within a few seconds, the exchange will know let you know whether your order is filled or not.
Once the order is confirmed, the exchange sends the message back to your broker and then your broker will instantaneously notify you on your trading platform that your trade is filled…
Now, there are many different brokers and participants around the world.
Such as a lot of brokers, and a lot of retail and institutional traders and investors…
This little mind map could expand endlessly, and that’s how the stock market works.
Of course, there are times where certain people have the privilege to get their order into the exchange directly.
But most of you reading this lesson right now, it's unlikely that you know you will fall under the category as that’s usually for the institution.
With that said, let’s do a quick summary…