What is continuous trading?
Continuous trading concerns the process that is carried out and carried out immediately after the placement, the place after the collection of trades. Most trades in the United States are carried out by means of a continuous trading system. Such a system has several advantages, including increased speed.
Trading concerns the concept of purchasing and sales of shares. Initially, this happened personally on the floor of the New York Stock Exchange. While there is still personal trading, many trading has moved online and is carried out from a distance by licensed stock brokers and individual investors who can trade online using discount mediation houses.
When you want to buy shares or exchange shares, you place your order. Can place either market order or limit order. If he / she plays a market order with continuous trading, this order is made as soon as it is placed. Buys shares for anything "Ask" which reference price the price at that time asks for current owners actionand. Alternatively, the person could issue a limit order and specify that the shares only purchase a certain specified price; In such a situation, he then buys shares immediately for shares reaching a specified price.
As part of the continuous trading system, as soon as someone has included a market order, this order is issued and the person becomes the owner of the shares. The same applies as soon as someone's limit order reaches the price at which he decided to buy or sell. This is contrary to the batch trading in which a number of smaller orders were collected and the purchase or sale was only carried out when a larger order or purchase or selling request occurred.
There are many benefits for continuous trading. First, the fact that the process is faster is important. A person can buy and sell shares immediately instead of waiting. Since stock prices sometimes quickly and wildly fluctuateIt is important that the investor has the ability to do so. Otherwise, the price of the shares it wants to buy or sells could change before the batch order.
However, the main disadvantage is the increased cost of placing many small individual orders. It is easier for a broker or buyer to place one large order as opposed to ten small ones. Since the buyer and sellers generally pay a commission for each trade carried out, but most of these costs are transmitted to an individual investor, unlike brokers or brokerage houses that actually carry out shops.