Trading that takes place outside the public order book, often via direct negotiation or in dark pools.
Common for: Large institutional block trades.
Trading done directly between parties without using a formal exchange.
Examples: FX, some derivatives, bonds.
Pros: Flexibility, customization
Cons: Less transparency, higher counterparty risk
The lowest price a seller is willing to accept for a security. Opposite of: Bid Price
Trading that occurs on a regulated public exchange, such as the NYSE or LSE.
Offers: Transparency, price discovery, and regulatory oversight.
The total number of outstanding derivative contracts (options or futures) that haven’t been settled.
Indicator of: Market activity and liquidity.
An order that remains active until it is either filled or canceled.
Types: GTC (Good Till Cancelled), Stop Orders.
A derivative that gives the buyer the right—but not the obligation—to buy (call) or sell (put) an asset at a specified price before a certain date.
Used for: Hedging, speculation, income strategies
Key Terms: Strike price, expiration, premium
A list of all available options contracts for a specific security, organized by strike price and expiration date.
An agreement that gives the holder the option but not the obligation to buy or sell an underlying asset at a fixed price until or on a specific date. The holder is the trader who buys the contract and the writer is the trader who sells the contract. The two most common types of options contracts are put and call options, which give the holder the right to sell or buy, respectively, the underlying asset.
A real-time, electronic list of buy and sell orders for a particular asset, organized by price level.
Used by: Traders to gauge supply/demand and price trends.
Visible in: Lit markets
The exchange or venue in which the order is sent to be executed.
The sequence and volume of buy and sell orders in the market.
High-frequency traders (HFTs) and brokers often analyze order flow for edge or internalization.
An Order Management System (OMS) is software used by brokers, asset managers, hedge funds, and other financial institutions to enter, manage, and execute orders in financial markets. It acts as the central hub for the entire order lifecycle, from the moment a trader decides to buy/sell until the trade is executed, confirmed, and settled.
The software component of an exchange that pairs buy and sell orders based on price and time priority.
Various instructions attached to trade orders to control execution.
Common Order Types:
A decentralized market where trading is done directly between two parties without a central exchange.
Instruments: Bonds, derivatives, FX
Pros: Customization
Cons: Less regulation and transparency
The risk of adverse price movements occurring after market close, especially relevant in markets that are not 24/7 (e.g., stocks).