dt动量交易教材(9)

dt动量交易教材

There are three major exchanges where stocks are traded. The New York Stock Exchange(NYSE), the American Stock Exchange (AMEX), and the National Assoc. of Securities Dealers(NASDAQ). The NYSE and AMEX stocks are traded on what is called a trading floor which islocated at a physical location. The stocks are traded by representatives of Brokerage housesaround trading pits. Your Broker will contact a person on the floor of the exchange to executeyour trade. The NASDAQ trades occur on computers tied into a large trading system and isgenerally a faster system of trading.

You can enter and exit a position faster on the NASDAQ. Most of my trades occur on theNASDAQ. The importance of being executed rapidly is that you get fast confirmation on tradesand you can react faster should you need to exit your position quickly.

Stocks are traded on the NASDAQ exchanges by Marketmakers. They are responsible for buyingor selling the stocks to the investor. They sell their stock at a higher price than they buy it for,and this is how they make their money. The price he buys it for is called the "Bid" and the pricehe sells it to you for is called the "Ask". The difference between the Bid and Ask is called the"spread." If a Marketmaker asks a price of 5 dollars per share and bids a price of 4 7/8, thespread is 1/8.

Marketmakers are overseen by the exchange where their stocks are traded to assure a fair priceand a small spread. Many times the spread is determined by the average daily volume of tradeson a stock. The profit he makes is then determined by the laws of supply and demand. If a stockis not traded very much, the Marketmaker will need to make more money per trade to make itworthwhile for him to make a market in the stock. I will not normally deal with stocks with aspread over 1/8. This is beneficial for loss control.

When you place a trade, your Broker will call the Marketmaker and place the order for you. Youcan place the trade at a specific price called a "limit order" or you can place the trade at the goingrate at the time the Marketmaker receives the order called a "market order". I almost alwaysplace limit orders to buy, and market orders to sell. Limit buy orders protect you in case of a fastrun up, and market sells protect you against a fast sell off. When I want out, I want out.

It might be helpful to think of the Stock Market as a grocery store. The store owner is themarketmaker. He purchases groceries and resells them to the public. He will purchase a loaf ofbread for $1.00, and sell it for $1.125 or 1 1/8. His profit is $.125 or 1/8. The price he pays forthe loaf of bread is called the "BID", and the price you purchase the bread from him is called the"ASK." The difference between the two prices is called the "spread."

Your broker is the guy who goes to the store for you, and purchases the groceries you tell him tobuy. He does this for a fee called a "trading fee". He will charge you the fee every time he goesto the store to buy, and again when he sells. My Broker charges $20 for each transaction. I canpurchase up to 5000 shares of any company for $20. If I purchase more than 5000, he will chargeme an extra penny per share for the whole lot. If I purchase 6000 shares, the cost would be $20

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