Opposite the Fixed Income and Currencies department of investment banks, which includes interest rate and foreign exchange traders and salespeople, is the equity department, which is called “equity markets.”
To differentiate them from the operators who deal in equity derivatives, we tend to call the markets that trade in cash equities “cash equity” markets.
Equity trading is the buying and selling of stocks in the financial markets. There are several ways to invest in stocks. Most equity trading refers to the buying and selling of shares of public companies through an exchange or over-the-counter products.
Each country has its own stock exchange (organized market), where shares of listed companies are bought and sold. These can vary by stock market sector and industry, and each exchange has its own trading hours, which apply on weekdays. Opening and closing times vary by country.
Stock trading is usually conducted on an organized market through an electronic platform, and at the center of this market we have the order book. An order book is a record of all the buy and sell orders of financial securities that updates in real time.
Order books allow a trader to position themselves in relation to others market participants in the hope of selling or buying shares.
Usually, traders can only see the five best bids (the price a potential buyer is prepared to pay) and the five best offers or asks (the price at which someone is prepared to sell), which are displayed across two columns (buy and sell). Alongside each bid is a number indicating the quantity of buy orders at that price. Be careful: The same bid price can reflect demand from several operators who want to buy at the same price. The order book then shows the number of traders at this price and the total quantity requested by these traders.
Limit orders – orders to buy or sell stocks and a specific price or better always appear in the order book. By contrast, trigger orders – which are executed only when certain conditions are met – are not entered in the order book.