Understanding the trading interface
Chart, order book, position overview, and order entry look similar everywhere. Knowing what you're looking at prevents a lot of input mistakes.
Four areas show up almost everywhere. The chart shows the price history. The order book shows who currently wants to buy and sell at what price. The order entry is where you type in your order. The position overview shows what you hold.
In the order book, buy offers sit on the left, sell offers on the right. The highest buy price and the lowest sell price face each other. The gap between them is the spread, and you pay it on every immediate purchase.
The position overview usually shows an unrealized result. That number keeps changing and isn't real yet. It only becomes real once you sell. Many beginners react emotionally to a number that doesn't even exist yet.
Practical advice for the first few weeks: close the position overview when you don't need it. Constantly staring at it leads to constantly trading, and constant trading costs money.
The order book is sorted by price and time. What's visible is market depth, meaning cumulative volume at each price level. That's a snapshot, not a commitment: orders can be pulled at any time, and a significant share of the displayed volume disappears as the price approaches it.
The order entry distinguishes between order type, time in force, and additional conditions. Mistakes typically arise in three places: confusing share count with order value, confusing the limit price with the stop price, and choosing a duration shorter or longer than intended. Reviewing the order preview before submitting prevents most of these.
Displayed prices are, depending on the provider, reference prices from a specific venue and not necessarily the price your order will execute at. In off-exchange trading, the provider quotes its own prices, which can deviate from reference prices. Judging execution quality therefore requires comparing against an independent reference price at the moment of execution.
Summary
- The spread sits in the order book between the best buy and sell offer.
- An unrealized result isn't a real result yet.
- Reviewing the order preview before submitting prevents most input errors.
Did you get it?
What does market depth in the order book show?
Cumulative volume at each price level, as a snapshot. Orders can be pulled at any time.
Why is the unrealized result misleading?
Because it keeps changing and only becomes a real result once you sell.
Is the displayed price your execution price?
Not necessarily. Depending on the venue and provider, the displayed and executed price can differ.
Related
- Spread, slippage, and liquidityStage 1
- What a stock exchange isStage 0
- Order typesStage 1