Chapter 3.2 securities Markets - trading mechanics

Market Order

An order to buy or sell a security immediately at the best available current price.

Limit Order

An order to buy or sell a security at a specified price or better.

Stop Order

An order that becomes a market order once the stock reaches a specified price.

Stop-Limit Order

An order that becomes a limit order once the stock reaches a specified price.

Day Order

An order that expires at the end of the trading day if not executed.

Good-Till-Canceled (GTC)

An order that remains active until it is either executed or canceled by the investor.

Margin

The portion of the purchase price contributed by the investor; the remainder is borrowed from the broker.

Initial Margin Requirement

The minimum percentage of the purchase price that must be paid in cash when buying on margin.

Maintenance Margin

The minimum equity that must be maintained in a margin account.

Margin Call

A demand by the broker for the investor to deposit additional funds or securities to bring the margin account up to the required level.

SEC (Securities and Exchange Commission)

The federal agency responsible for enforcing U.S. securities laws and regulating the securities industry.

FINRA (Financial Industry Regulatory Authority)

A self-regulatory organization that oversees brokerage firms and exchange markets.

Regulation T

A Federal Reserve rule that governs the amount of credit that can be extended by brokers to investors for the purchase of securities.