This document defines key players in the stock exchange such as stockbrokers, specialists, and floor brokers. It also outlines different types of stock orders like market orders, limit orders, and stop loss orders. Finally, it provides explanations of common trade terminology including round lots, odd lots, ticker tapes, and trading posts.

1. Unit 2B:
Players on the
Stock Exchange
Mr. Elsesser
Wall Street I

2. Key Players in the Stock Exchange
• Stockbroker (basic definition):
▫ An agent licensed by the SEC to buy
and sell securities for clients and
receives a commission based on the
total dollar volume of each order.

3. Key Players in the Stock Exchange
• Specialists:
▫ Make money by buying and selling at right
price and by charging commissions to floor
brokers if they leave their orders to go to
another trading post.

4. Key Players in the Stock Exchange
• Floor Broker:
▫ The person who actually executes a
stock order on the exchange floor.
• Two Dollar Broker:
▫ An independent member of the stock
exchange who is not connected with the
firm. Used to get $2 for every order.
 Occurs in cases when a brokerage’s floor
broker is too busy with other orders.

6. Key Players in the Stock Exchange
• Specialist Firms at NYSE:
▫ Seven specialist firms
▫ 450 specialists covering 2,700 stocks
• Market Makers:
▫ A market maker is a person who trades a
particular OTC stock and who is similar to
a NYSE specialist.

7. Key Players in the Stock Exchange
•Full-Service Brokerage Firm:
▫A firm that offers a complete range of
services from research data to investment
advice.
•Registered Representative:
▫A broker who passes the “Series 7 Exam”
A comprehensive securities test

9. Types of Stock Orders:
1. Market Order:
 An order to a broker to buy or sell a stock
at the best possible price.
 “I want to buy 200 shares of Disney at the
current price.” or “Sell my shares of Disney at
the highest price.”
2. Limit Order:
 An order to a broker to buy or sell shares
at a specific price not greater than a
specific amount
 “I want to buy 200 shares of Disney if the price
drops to $40 per share.” or “Sell my shares of
Disney if the price reaches $45 per share.”

10. Types of Stock Orders:
3. Stop Loss Order:
 An order to a broker to sell
stock when the price has
declined to a specific
level.
 Ex. Investor paid $30,
current price is $40.
Investor tells broker to
sell if stock drops to $38
to be sure to get an $8
gain.

11. Types of Stock Orders:
4. Short Sell:
 You borrow shares, sell them on the
market, and then collect the proceeds as
cash.
 Borrow 10 shares, and sell them for $100
 Later, you buy back same number of
shares from somewhere else to repay the
person (or brokerage) from whom you
borrowed them.
 Buy 10 shares at market price, $80
 If you buy back the shares at a price lower
than the price at which you originally sold
them, you collect the difference.
Short selling is a way to profit from a
falling stock!!!

12. How Long Should a Stock Order
Stand?
• Stop Loss Order:
▫ An order that is filled that day or is
automatically cancelled.
• Good Till Cancelled (GTC):
▫ An order that will stand until it is filled
or until the investor cancels it.

13. Trade Lingo:
• Round Lots:
▫ A stock order that is a multiple of 100
shares
 Example: 100, 200, 300, etc.
• Odd Lots:
▫ A stock order that is not a multiple of
100 shares. Commissions are higher for
odd lots.
 Example: 50 or 322 shares

14. Trade Lingo:
• Ticker Tape:
▫ An electronic display of stock
transactions that flashes across a
screen in most brokerages.
• Computerized Quote Machine:
▫ A system that gives up to the minute
stock quotes and also allows a
stockbroker to access information on
corporations, industries, currencies,
stocks and bonds.

16. Trade Lingo:
• Trading Post:
▫ An area on the exchange floor where
particular stocks are traded.
• Designated Order Turnaround (DOT):
▫ A computerized system that allows a
stockbroker to wire an order directly to a
specialist’s computer at the trading post
where the stock is traded.
 Smaller orders, Less than 1,200 shares