Market Order
An investor may place his transactions with a broker without specifying the price. Such
order of placing transaction without specifying the price is called market order. It is the
responsibility of the broker to protect the interest of the investor.
An investor may specify the minimum price level in case of selling or specify the
maximum price in case of purchasing securities. This is called limit order. If the investor
specifies that the broker must make the transaction at the day’s opening price, it is called
open order.
After the transaction is over, the broker will intimate the details to his client.
Lots
In Stock Exchanges the trading of securities must take place in a smooth manner.
Therefore, each company must prescribe limits in terms of the number and variety of
securities, amount and duration. Often this is called ‘market lot’. Other than market lot,
sessions will be held for trading securities, known as ‘odd lot’. Normally, it is more
beneficial for an investor to participate in a 'market lot' session, rather than in an ‘odd lot'
session.
Ring
Collective Assessments are made in Stock Exchanges at fixed hours. Brokers make
investments on behalf of the investors or the investors themselves make the investments.
If there is healthy competition, there will be a perfect market to determine the price level
of different shares.
Trading in shares
Shares are of two categories
? Specified and
? CashThe shares which are activity traded will be listed under the specified list. Securities
like, preference shares, debentures and convertible debentures are listed under the cash
category.
Settlements
The dates for settlement of shares will be fixed by the Stock Exchange. On the first date,
all the outstanding transactions will be settled. Thereafter, securities will be traded for
cash. Alternatively, both the seller and the buyer may agree to defer the settlement of
transactions to the next settlement date. Normally this is known as settlement trading.