Used by value investors. Focuses on financial statements.
Used by day traders. Focuses on daily price movements.
There are 4 main assets:
- Stocks
- Bonds
- Currencies
- Commodities
BID - Highest price a buyer is prepared to pay.
ASK - Lowest price a seller will accept.
No trade can occur until one participant is willing to SELL stock for an ASK price, which another can BUY as a BID price.
- BUY someone's ASK price.
- SELL at your own BID price.
If there are more people who want to buy a stock than people who are willing to sell the stock–there are more buyers than sellers–the stock's price will rise due to increased demand. On the other hand, if more people are selling a given stock than are buying it, its price will decrease.
BUY:
- Market order: current price
- Limit order: buy when target price is reached