How to Trade Stocks: Markets, Brokers and Orders

How to trade stocks is mostly a question of what happens after you press the button. Your order goes to a broker, which may send it to an exchange, to another venue or to a wholesaler that fills it itself. What you pay, how fast you are filled and what happens when the price jumps all depend on choices you may not know you made.

What happens to a stock order after you place it?

The course follows one order from end to end: the broker’s checks, the routing decision, the venue’s matching rules, the fill report and the settlement two systems later. Once you have seen it once, order types stop being a menu and become tools you choose for a reason.

Which order type should a new trader use?

It depends on what you care about more, the price or the fill. Market orders fill but can fill badly; limit orders protect the price but may never fill; stop orders become market orders at the worst moment. The course has you place each type in a simulated account and record what happened.

Who is this course for?

Anyone starting the trader path, and experienced traders who learned on one broker and want to understand the plumbing. It needs no programming and no prior knowledge.

What you will be able to do

• Explain how an order travels from your broker to an exchange or another venue and back.
• Choose the right order type for a stated goal and describe how it can fail.
• Calculate margin, buying power and the cost of a short position.
• Adjust a position correctly for dividends, splits and other corporate actions.
• Keep a trade record that supports your tax return in your country.

Syllabus, module by module

1. Exchanges and venues

   Listed exchanges, alternative venues and wholesalers, and who is on the other side of your trade.

2. Brokers and accounts

   Cash, margin and retirement accounts, payment for order flow, and what investor protection covers.

3. Order types

   Market, limit, stop, stop-limit, trailing and bracket orders, time-in-force and when each misbehaves.

4. Margin and short selling

   Buying power, maintenance margin, margin calls, borrow fees and short squeezes.

5. Corporate actions

   Dividends, splits, mergers and spin-offs, and what they do to your positions and your stops.

6. Settlement, statements and tax

   Settlement cycles, reading a broker statement, cost basis and wash-sale style rules.

How the certificate is earned

Weekly quizzes and two graded problem sets: an order-handling case and a full account statement you reconcile by hand. On a pass you receive the Course certificate in How to Trade Stocks, issued by the Institute with a verification code. Read how certification works.