Amateur question

Zmtrainer

Newbie
6 0
I have been interested in the financial markets for the past 4 months and have been non stop in my search for knowledge of the markets and how they work. I intend long term to get a jobnin the sector.

However I seem to be lacking the fundamentals and have the following two questions.

Try not to laugh too much.

1. If you own equities in a company and you are looking to sell - are you always selling to a buyer? Might sound silly but I have found it hard to understand that there is always a buyer for every share at any given time. No books/literature ever seem to mention that there could be scenarios where you are unable to sell.

2. Profit made on SB and CFDs - where exactly is this coming from? Who is 'losing' money in order to pay you?

Thanks guys
 

barjon

Legendary member
10,616 1,754
1. When your sell order goes to the electronic exchange (for most) via your broker it's matched to a buy order. Otherwise (mainly for smaller shares) the order goes to a market maker who is duty bound to quote a price on both sides for a specific quantity (market lot) without knowing whether you wish to sell or buy. Thus he must buy if you say sell and it's down to him how he disposes of surplus inventory.

2. Your "bookie" loses the money but will probably be compensated wholly or in part by others who have taken the opposite position to yours. They will generally balance their book by hedging any imbalance (or part thereof) in the market.
 

Zmtrainer

Newbie
6 0
1. When your sell order goes to the electronic exchange (for most) via your broker it's matched to a buy order. Otherwise (mainly for smaller shares) the order goes to a market maker who is duty bound to quote a price on both sides for a specific quantity (market lot) without knowing whether you wish to sell or buy. Thus he must buy if you say sell and it's down to him how he disposes of surplus inventory.

2. Your "bookie" loses the money but will probably be compensated wholly or in part by others who have taken the opposite position to yours. They will generally balance their book by hedging any imbalance (or part thereof) in the market.

Appreciate the response. Thank you
 

DionysusToast

Legendary member
5,963 1,499
I have been interested in the financial markets for the past 4 months and have been non stop in my search for knowledge of the markets and how they work. I intend long term to get a jobnin the sector.

However I seem to be lacking the fundamentals and have the following two questions.

Try not to laugh too much.

1. If you own equities in a company and you are looking to sell - are you always selling to a buyer? Might sound silly but I have found it hard to understand that there is always a buyer for every share at any given time. No books/literature ever seem to mention that there could be scenarios where you are unable to sell.

2. Profit made on SB and CFDs - where exactly is this coming from? Who is 'losing' money in order to pay you?

Thanks guys

Generally speaking there's always someone to take the other side of the trade because market makers/specialists get paid to do so.

They might just do it at a really poor price if there is little interest.

In terms of SB & CFDs, what they effectively do is a bit like a bookie laying off a bet.
 
 
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