The Trading Process

Have you ever wondered about how the stock market operates? There is what is called a trading process. The stock exchange manages the trading process. It determines who may trade and which company's shares may actually trade. Brokers are given access to the stock exchange, so that they can stand in for the buyers and sellers. It's like your parents going to the market for you when you are actually the one who wants to sell! Also, every trade is controlled by trained Market Regulation Services staff to ensure the market is always going to be fair for everyone.

Well, I'm going to lay out the trading process in steps so it will be easier for you.

1. An order is placed with a broker at a TSX organization my phone, in person, or by computer (technology is very advanced, eh?)
2. Orders are matched electronically by the Exchange system on the computer.
3. When any match is found, the broker informs the client of the trade price plus the commission.

So how does the buyers and sellers agree on the price? There is a system called bid and ask. The buyer bids at $99, $101, and $102. However, the seller asks for $102, $103, or $104. The price that both can agree on is $102, so that is the final price.

Back to Menu