You buy through a licensed firm
Investors do not buy directly from the exchange. Every order goes through a licensed trading member. Check that the firm is licensed before you share any documents or send any money.
Stock Market Basics · Lesson 3 of 10
How buying and selling works
Brokers, depository accounts, the order book, bids, asks and limit orders.
6 minutes · 8 questionsLesson 3 · Card 1 of 5
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You buy through a licensed firm
Investors do not buy directly from the exchange. Every order goes through a licensed trading member. Check that the firm is licensed before you share any documents or send any money.
The five steps
Choose a licensed trading member. Complete the identity (KYC) checks. Open a central securities depository (CSD) account, where your holdings are recorded. Fund your account. Then place an order.
The order book
Buyers post a bid, the highest price they will pay. Sellers post an ask, the lowest price they will accept. A trade happens when a bid and an ask meet. The gap between them is the spread.
Limit orders
A limit order sets the worst price you will accept. It protects you from a poor price, but it may not be filled if the market never reaches it. Ask your provider which order types it offers.
The trading day
Press reports of the ESX trading manual describe a pre-open session from 9:00 to 9:30 that sets opening prices, then continuous trading until 3:00 in the afternoon. Check the ESX for the current rules.