Trading Basics topic

[RasShango]

What is a trading exchange?
A trading exchange is a marketplace that brings buyers and sellers together to carry out trades.

What do brokers do?
Brokers are the people in the middle of these transactions. In many ways brokerage is slowly being taken over by applications that allow individuals to buy and sell assets on their phone or home computer.

What is margin trading?
Margin trading is essentially trading with funds you do not own. You barrow from the exchange or your broker and use these funds to carry out trades.

What is the difference between Bid and Offer (or Bid and Ask)
Bid and ask essentially refer to buy or sell. A bid is the highest price a buyer is willing to pay and an ask is the lowest price a seller is willing to sell at.

What is the leverage?
Borrowing money and using it to trade. When you trade on leverage you are using other peoples money to buy assets and securities. Essentially you are leveraging these funds in hopes of creating your own gains.

[AD4]

What is a trading exchange?

A market place where financial instruments are traded

What do brokers do?

A brokerage functions as a middleman that connects buyers with sellers to facilitate transactions

What is margin trading?

Margin trading is when you buy or sell an investment with borrowed money.

What is the difference between Bid and Offer (or Bid and Ask)

Bid and ask refers to a two-way price quotation that indicates the best potential price at which an investment can be sold and bought at a given point in time. The bid price is the maximum price that a buyer is willing to pay for a share of an investment. The asking price is the minimum price that a seller is willing to take for that same investment.

What is the leverage?

Leverage is the use of debt to increase the returns of an investment. This allows investors to increase their buying power.

[MPer]

1. What is a trading exchange?
   It’s a marketplace where one can buy or sell financial instruments (stocks, bonds, EFTs, crypto).,etc.
2. What do brokers do?
   Matches buyers with sellers
3. What is margin trading?
   s a tool that facilitates trading even for those who don’t have the requisite amount of cash on hand. Buying on margin enhances a trader’s buying power by allowing them to buy for a greater amount than they have cash for; the shortfall is filled by a brokerage firm at interest
4. What is the difference between Bid and Offer (or Bid and Ask)
   Bid is what people are willing to buy for; Ask is what buyers are asking
5. What is the leverage?

• Leverage refers to the use of debt (borrowed funds) to amplify returns from an investment or project.
• Investors use leverage to multiply their buying power in the market.

[welowy]

1. What is a trading exchange?
   A trading exchange is a marketplace where people can buy sell assets.

2. What do brokers do?
   Brokers help people without experience invest in a market.

3. What is margin trading?
   Margin trading is borrowing funds to purchase an investment.

4. What is the difference between Bid and Offer (or Bid and Ask).
   A bid is the maximum price a buyer is willing to pay for an asset. The ask price is the minimum a seller is willing to accept for an asset.

5. What is the leverage?
   Leverage means borrowing funds to increase the return of an investment.

[cge5009]

1. What is a trading exchange?
   A centralized or decentralized platform where buyers and sellers come together to exchange assets.

2. What do brokers do?
   A broker facilitates the buying and selling of many different types of assets such as options, and futures and can act on behalf of their clients.

3. What is margin trading?
   Taking out a debt position to facilitate a trade.

4. What is the difference between Bid and Offer (or Bid and Ask)
   The bid price is what a buyer is willing to pay while the offer price is what a seller is willing to accept for that asset.

5. What is the leverage?
   It is debt position that allows you to trade more value than what you own.

[Dimitri_N]

1. An exchange is a marketplace where securities, commodities, derivatives and other financial instruments are traded.

2. A broker is an individual or firm that acts as an intermediary between an investor and an exchange.

3. So margin trading refers to the process whereby individual investors buy more stocks than they can afford to. Margin trading also refers to intraday trading.

4. The bid price refers to the highest price a buyer will pay for an asset. The ask price refers to the lowest price a seller will accept for an asset. The difference between these two prices is known as the spread; the smaller the spread, the greater the liquidity of the given asset/security.

5. Leverage is an investment strategy of using borrowed money specifically, the use of various financial instruments or borrowed capital to increase the potential return of an investment.

[cryptcat]

1. What is a trading exchange?
   an exchange is the marketplace for buyers/seller whereby the means of buying/selling securities/commodities/financial derivatives occurs
2. What do brokers do?
   connect buyers and sellers. It can be an individual person or a group of people (like a firm)
3. What is margin trading?
   when an individual borrows money against themselves (I think from the broker?) to create a position on a trade. The ‘margin’ is the differential amount of money between the profit and the amount borrowed. A buyer uses leverage to make these trades.
4. What is the difference between Bid and Offer (or Bid and Ask) the bid is the “maximum price that a buyer is willing to pay” and the ask is the “minimum price a seller is willing to sell”.
5. What is the leverage? borrowing money to amplify a profit. The goal is to invest more money to make a higher return.

[cryptcat]

Question
My understanding of the definition of a ‘spread’ is the price difference between the selling and buying price, is that correct? How does a spread get created? I envision that since the crypto market is 247 that spreads tend to be very small because, depending on the aggression of the buyer or seller, a close agreement comes in small increments. Does a spread really only occur in markets in which there are particular opening and closing times?

[HTBH]

1. you can buy and sell stocks, crypto or other things
2. connecting buyers and sellers
   3.you buying something you actually can’t afford. lets say you 20k of securities bought 10 k cash and 10 k borrowed. When the value of these securities rises by 25% to $25,000, and the amount you borrowed from your broker stays at $10,000, your equity becomes $15,000.
   4.buy and sell
   5.leverage is the use of borrowed funds to increase ones trading position

[thecil]

@cryptcat

Does a spread really only occur in markets in which there are particular opening and closing times?

exactly, each candle on the chart represent the time frame you are watching, if your looking at the charts at 15 min, each candle represent the opening and close every 15 min, and so on with charts at long time frames (30 min, 1 hour, 4 hours, etc…)

If you have any more questions, please let us know so we can help you!

Carlos Z.

[Austin_zammit]

1. What Is an Exchange?

An exchange is a marketplace where securities, commodities, derivatives and other financial instruments are traded. The core function of an exchange is to ensure fair and orderly trading and the efficient dissemination of price information for any securities trading on that exchange. Exchanges give companies, governments, and other groups a platform from which to sell securities to the investing public.

2. What do brokers do?
   A broker is a person who buys and sells things on behalf of other people. A broker may also arrange transactions between a purchaser and vendor.

3. 1. What is margin trading?
      Margin trading is a method of trading assets using funds provided by a third party. When compared to regular trading accounts, margin accounts allow traders to access greater sums of capital, allowing them to leverage their positions. Essentially, margin trading amplifies trading results so that traders are able to realize larger profits on successful trades. This ability to expand trading results makes margin trading especially popular in low-volatility markets, particularly the international Forex market. Still, margin trading is also used in stock, commodity, and cryptocurrency markets.

In traditional markets, the borrowed funds are usually provided by an investment broker. In cryptocurrency trading, however, funds are often provided by other traders, who earn interest based on market demand for margin funds. Although less common, some cryptocurrency exchanges also provide margin funds to their users.

4. What is the difference between Bid and Offer (or Bid and Ask)
   The term bid and ask refers to the best potential price that buyers and sellers in the marketplace are willing to transact at. In other words, bid and ask refers to the best price at which a security can be sold and/or bought at the current time.

The Bid Price

The bid price is the price that an investor is willing to pay for the security.

For example, if an investor wanted to sell a stock, he or she would need to determine how much someone is willing to pay for it. This can be done by looking at the bid price. It represents the highest price that someone is willing to pay for the stock.

The Ask Price

The ask price is the price that an investor is willing to sell the security for.

For example, if an investor wants to buy a stock, they need to determine how much someone is willing to sell it for. They look at the ask price, the lowest price someone is willing to sell the stock for.

Understanding Bid and Ask

Bid and ask is a very important concept that many retail investors overlook when transacting. It is important to note that the current stock price is the price of the last trade – a historical price. On the other hand, the bid and ask are the prices that buyers and sellers are willing to trade at. In essence, bid represents the demand while ask represents the supply of the security.

For example, if the current stock quotation includes a bid of $13 and an ask of $13.20, an investor looking to purchase the stock would pay $13.20. An investor looking to sell the stock would sell it at $13.

Example of Bid and Ask

John is a retail investor looking to purchase stocks of Security A. He notices the current stock price of Security A is at $173 and decides to purchase 10 shares for $1,730. To his confusion, he noticed that the total cost came out to $1,731.

John assumed that it must’ve been an error. He later realizes that the current stock price of $173 is the price of the last traded stock of Security A and that he paid the asking price of $173.10.

5. 1. What is the leverage?

• Leverage is the use of borrowed funds to increase one’s trading position beyond what would be available from their cash balance alone.
• Brokerage accounts allow the use of leverage through margin trading, where the broker provides the borrowed funds.
• Forex traders often use leverage to profit from relatively small price changes in currency pairs.
• Leverage, however, can amplify both profits as well as losses.

[Bull75rm]

1. An exchange is a marketplace where financial instruments are traded.

2. A broker executes orders on behalf of clients.

3. Margin is the money borrowed from a broker to purchase an investment and is the difference between the total value of investment and the loan amount.

4. The bid price is the highest price a buyer will pay for a security while the ask price is the lowest price a seller will accept for a security.

5. Leverage is the use of debt (borrowed funds) to amplify returns from an investment or project.

[Keith2]

1. A trading exchange is a marketplace where assets can be bought and sold within the trading platform for a fee.

2. A broker is usually a company but can also be a person in which buyers and sellers of assets can go and the brokerage will bring the parties together to make the sale for a brokerage fee.

3. Margin trading is trading but with borrowed funds from a broker in exchange for a commission which is usually much higher than when your trading with your own money.

4. One is as a seller and one a buyer.

5. Leverage trading is when you trade on a smaller price margin on the charts and usually on a smaller timeframe but you can increase the margin with higher leverage such as 10 x.

[Chad]

1. What is a trading exchange? The NYSE and Nasdaq are the primary exchanges that I have been using since 2018. Exchanges are marketplaces where marketable securities can be bought or sold.

2. What do brokers do? I currently deal with three brokers: Fidelity, Robinhood, and BlockFi. They are middlemen for my transactions.

3. What is margin trading? This is not something I have done. I am a cash trader. Yet, I could arrange to trade on margin. This would be beneficial if I were daytrading regularly.

4. What is the difference between Bid and Offer (or Bid and Ask) I normally will put in a limit order on my bid and asking prices for securities. Maybe I bid $122 per share for AAPL. I put in the limit order. When the transaction occurs, I put in a limit order to sell at $136 per share. This is an Ask price.

5. What is the leverage? As I mentioned before, I do not trade on leverage. There may be a time in the future where I will need liquidity in my trades, yet I am currently not a risk taker willing to be subject to a margin call.

[Alex2]

1. What is a trading exchange?
   An exchange is a marketplace where crypto, securities, and other financial instruments are traded.
2. What do brokers do?
   A broker is an independent person or a company that organises and executes financial transactions on behalf of another party.
3. What is margin trading?
   Margin trading means borrowing money from a brokerage firm in order to carry out trades. When trading on margin, investors first deposit cash that then serves as collateral for the loan, and then pay ongoing interest payments on the money they borrow. This loan increases the buying power of the investor, allowing them to buy a larger quantity of securities. The securities purchased automatically serve as collateral for the margin loan.
4. What is the difference between Bid and Offer (or Bid and Ask)
   A Bid is the price selected by a buyer to buy a stock, while the Offer is the price at which the seller is offering to sell the stock.
5. What is the leverage?
   Leverage works by using a deposit, known as margin, to provide you with increased exposure to an underlying asset. Essentially, you’re putting down a fraction of the full value of your trade – and your provider is loaning you the rest.

[diegosan]

1. What is a trading exchange?
   It’s a marketplace for trading different financial assets.

2. What do brokers do?
   Brokers can execute trades on behalf of clients, and can also offer investing advice and trading management services.

3. What is margin trading?
   In margin trading an exchange(broker) lends assets to traders so they can amplify their trading positions and increase their profits. The assets in the traders’ margin account is used as a collateral for the loan. The loan comes with an interest that must be paid.

4. What is the difference between Bid and Offer (or Bid and Ask)
   A bid is the price of an asset a buyer is willing to pay. An offer is the price a seller is willing to sell an asset for. A bid price is always lower than the ask price, and is called the spread.

5. What is the leverage?
   Leverage refers to taking on debt. It’s used by experienced traders to multiply their profits. Leverage can magnify both gains and losses.

[Ishoboy]

1. What is a trading exchange?
   -A trading exchange is a marketplace where you can bought and sold financial instruments such as crypto, securities, commodities, derivatives and others.

2. What do brokers do?
   -They serve as an intermediary between you and the market.

3. What is margin trading?
   -Trading on borrowed funds, which forms a collateral for the loan from the broker.

4. What is the difference between Bid and Offer (or Bid and Ask)
   -Bid is the highest price a buyer is willing to buy a certain asset, and Ask is the minimum price a seller wants to sell, so the difference between the two of them is the price spread which is a key indicator of the liquidity of an asset, which is in general the smaller the spread, the better the liquidity.

5. What is the leverage?
   is a tool used by traders to borrow a money to enter into a more larger position, or in other words it is the use of debt to amplify returns from an investment and on the other side it is also more risky, so be careful in trading with leverage.

[PDF2028]

1. An exchange is a marketplace where various financial instruments are traded.

2. A broker is a middleman, an individual, or company that connects investors to the financial services of an exchange.

3. Margin trading is when you buy and sell into an investment vehicle with borrowed money.

4. The bid price is the maximum price a buyer wants to buy at. The ask price is the minimum price a seller is willing to sell.

5. The use of borrowing money in order to increase the potential return of an investment.

[mchoeti]

What is a trading exchange?
In simple words it is a platform where you can trade assets.

What do brokers do?
Bring together sellers and buyers and of course take some fees

What is margin trading?
When we talk about margin trading it means you are trading with borrowed money
in other words: Margin is simply the minimum amount required in your account to start a trad

What is the difference between Bid and Offer (or Bid and Ask)
The price a buyer pays is called a Bid
The price a seller is willing to sell is called OFFER

What is the leverage?
Leverage means the borrowed capital,
This means that leverage allows you to trade more than the funds at your end.

[camarosan]

1. What is a trading exchange?
   An association of business for the purpose to trade.
2. What do brokers do?
   Is an individual or association that acts as an intermediary between an investor and exchanges.
3. What is margin trading?
   refers to the assets borrowed from a third party to make an investment
4. What is the difference between Bid and Offer (or Bid and Ask)
   The former is the price a buyer will pay, and Ask is the price the seller will accept
5. What is the leverage?
   The use of debt for amplify returns