This is later part of 3. Starting with stocks.
There are 2 types of intermediaries in the financial market.
One type is broker who is simply helps buyers locate sellers and vice verse and arrange the sales. Broker may also help buyers and sellers agree on a price. The buyer or sellers pay a fee, or commission, to the broker for these services. If you want to invest in individual stocks, you will need to set up an account with a broker. There are human brokers, and there are online brokers that let you do almost everything yourself, at your convenience, or you can have some kind of mixture.
The other type of intermediary is a dealer, who also connects buyers and sellers but does so indirectly. Dealer announce to the market that they will a specified security to anyone who is willing to pay the dealer’s asking price, or the ask-price for short. At same time, dealers also announce that they will buy a certain security from anyone who is willing to sell at the dealer’s offering price, or the bid-price. When the dealers buys a share of stock from someone and then sells it to you, he or she earns the difference between the ask price and the bid price, which is called the bid-ask price.
We tend to buy things in standard quantities, called lots, and most financial investment have standardized lot sizes. For stocks, the size of round lot is 100 shares.
There are several different types of orders you can submit to the market.
A market order is an order to buy or sell at whatever the current market price is.
A limit order places an upper limit on the price you are willing to pay or a lower limit on the price you are willing to receive.
A stop-loss order is on order to sell shares that is triggered once the price of the shares falls below a certain level.