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| Stock Trading On New York Stock Exchange - How It All Happens? |
| Written by Amit Kheterpal |
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Just imagine that you are a shareholder of a company XYZ and are trying to sell your shares in the company to somebody who is interested in buying them. Now if you wanted to look for buyers there a couple of options in the real world you could do that like put up a sale notice or give an advertisement in a local newspaper or go to internet and try to list it for sale at one of the auction places. Just imagine what would happen to world when almost everybody who owns the shares tries to do that, you would practically have a mad rush of advertisements all over the world.
The next best thing is that you would usually go to a place where all the buyers and sellers can congregate and try to settle deals with each other for a particular price, which typically for you is a stock exchange.
Trading on the New York Stock Exchange happens on the trading floor where the traders enter into a secure area called the trading floor and will try to strike up deals pretty much face-to-face. The brokerage firm will have clients who need to sell the shares, now these brokerage firms will get these orders to the floor borkers, who in turn go to a specific section of the exchange known as trading spot, which essentially is an area where the trading for that particular stock takes place.
At this particular trading spot there is person called the specialist whose job is to match the buyers and the sellers. No the tricky question is how much you should be selling it for or buying it for that particular stock and the method is called the auction method on the New York Stock Exchange. This auction method means that the current price is highest amount that a buyer is willing to pay and the lowest price at which you will be willing to sell. One the deal is struck the information is relayed back to the brokerage firm which in turn sends it to the client.
So it is mainly human interaction as you can see from the explanation above but this does not mean that there is no technology involved at all. In fact, there is technology involved in each and every step of the process from entering the orders to routing the orders to specialist and then sending it back to exchange and the broker firm.
If you are beginner looking to trade on the NYSE in one of the so called big stocks make sure to get in touch with a brokerage firm to handle your orders.
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