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The US stock marketsThe NASDAQ and the NYSE are the stock markets in the US that we will focus on to avoid redundancy. The NASDAQ (National Association of Securities Dealers Automated Quotation) is a computerized exchange without an actual trading floor. Orders are executed thru a complex computer system. You will find 2 types of stock market participants on the NASDAQ, Market Makers (MM) and electronic communication networks (ECN’s). There are various different Market makers as well as ECN’s which all interact thru computer systems. The New York Stock Exchange (NYSE): The NYSE is a centralized stock market exchange where shares are traded on an actual exchange floor. Every stock traded on the NYSE has its own “specialist” who is responsible for maintaining a fair and orderly market in that particular stock. On the NYSE only the specialist has insight into the order book, which holds all the orders for the stock he is responsible for. Let’s assume you are trying to buy XYZ for $15 but the best seller wants at least $15.25 for XYZ. In this case your order will be placed in the specialist’s order book on the bid side and will be executed once a seller is willing to sell you shares for your limit price. The information in the order book can be very valuable since big buy or sell orders are points of support/resistance. The specialists are responsible for maintaining a fair and orderly market in that particular stock. If you send your order to the NYSE via a direct access trading platform it will be send (via Super DOT) directly to the specialist’s order book for execution. The specialist is the only one who has access to the order book. Orders are executed strictly on a first come first serve basis. One example of this would be a situation where there is a huge sell order coming into the market but there are almost no buyers - without the specialist’s help the stock price would dump irrationally. It is his responsibility to buy the stock in this situation and to keep the stock at a “fair” level. The specialist is therefore always the buyer of last resort. Every order on the NYSE stock market has the chance to receive price improvement. For example if you are trying to buy XYZ for $100 and someone is entering a sell order with a limit of $99 you would end up buying the stock for $99.5. Since the NYSE is not fully computerized you will notice a difference in the speed of execution versus NASDAQ orders. This applies to the cancellation of orders as well. Even though it is slower you never wait longer than a few seconds for my order to get executed; only if there are buyers/sellers at my price limit of course. NYSE stocks in the level 2 window: If you place an NYSE symbol into a level 2 box you might be confused since there is more than just the NYSE displayed. This is because most of the stocks listed on the NYSE stock market are also traded on various regional stock market exchanges. Even though the quotes you see are in a level 2 box they are all level I quotations since they only display the inside market (best bid and ask) The NYSE quotes are almost always the most important since the major market participants use the NYSE for executions. Other market participants here include “BOST” (Boston stock exchange) or “PHIL” Philadelphia stock exchange. NYSE stocks on “Island”: Many of the major NYSE and AMEX stocks are no longer only traded on the traditional exchanges. They are now being traded thru ECN’s as well, with Island “ISLD” being the most important: The basics of NASDAQ order routing: Placing trades on the NASDAQ is a little more complicated than doing so on the NYSE. There are different order routes available. Those are Selectnet, SOES (small order execution system) and ECN’s (electronic communication networks). Selectnet can be seen as the center of the NASDAQ market even though it is only the second choice at best for most active traders. Access to Selectnet allows you to send your order to every available market participant. It is also possible to place bid and offers via Selectnet. SOES was implemented as a system for non-professional traders and allows them to execute their orders against market makers. SOES only sends the order out to market makers, not ECN’s. It’s mandatory for market makers to fill orders sent to them thru SOES. ECN’s are electronic networks that allow traders to execute orders against other ECN’s as well as to place their own bids and offers. Trading thru ECN’s is the fastest order way available since there are no middlemen involved and the ECN’s computers are usually very fast. My ECN orders usually get filled immediately if I am agreeing to someone else’s bid or offer. Order routing can get pretty complex since there are different rules and limitations for each route. Luckily there are intelligent order systems out there, which take a variety of order systems into account and do the work for you, making order routing pretty easy for the most part. The order entry itself will be something you will learn when you get your trading platform since they all have their own internal workings… Now we will change gears again and go into some details about The basics of technical analysis 
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