Understanding the trading interface
Chart, order book, positions overview and order ticket look similar almost everywhere. If you know what you're looking at, you'll make far fewer input mistakes.
Learning objective: After this lesson you can find your way around a typical trading screen without risking input mistakes.
You'll find four areas almost everywhere. The chart shows how the price has moved. The order book shows who wants to buy or sell at what price right now. In the order ticket you enter your order. The positions overview shows what you own.
The Order Book
In the order book the buy offers are usually on the left and the sell offers on the right. The highest buying price and the lowest selling price face each other. The gap between them is the spread. You pay it every time you buy straight away.
The Position Overview
The positions overview usually shows a gain or loss that isn't realized yet. That number changes constantly and doesn't mean anything yet. It only becomes real when you sell. Many beginners react strongly to a number that doesn't really exist yet.
A Tip for the First Weeks
A tip for the first few weeks: close the positions overview when you don't need it. If you look all the time, you trade all the time, and if you trade all the time, you pay all the time.
The order book is sorted by price and time. You see the market depth, meaning how much volume is waiting at each price level. That's a snapshot, not a promise. Orders can be withdrawn at any time, and a good part of the volume shown often disappears as soon as the price gets closer.
The Order Form
In the order ticket you choose the type of order, how long it should stay valid and any extra conditions. Mistakes usually happen in three places. People confuse the number of shares with the amount in euros, enter 100 and mean €100 rather than 100 shares. They confuse the limit price and the stop price. Or the validity is shorter or longer than intended. A look at the preview before sending prevents most of these mistakes.
Displayed Prices
Depending on the provider, the prices shown are those of a particular trading venue and not necessarily the price your order will be filled at. When trading off exchange, the provider quotes its own prices, which can differ. So the best way to see whether you got a good fill is to compare your price with an independent price at the same time.
Summary
- The spread sits in the order book between the best buy and best sell offer.
- An unrealized gain or loss isn't a result yet.
- A look at the preview before sending prevents most input mistakes.
Did you get it?
What does market depth in the order book show?
How much volume is waiting at each price level, as a snapshot. Orders can be withdrawn at any time.
Why is the unrealized gain or loss misleading?
Because it changes constantly and only becomes a real result when you sell.
Is the price shown your execution price?
Not necessarily. Depending on venue and provider, the displayed and actual price can differ.
Check your understanding
Your task
In the order book the highest bid is $49.95 and the lowest ask is $50.05. Calculate the spread in dollars and as a percentage of the ask, and what it costs you if you buy 100 shares immediately and sell them again immediately. Use the breakeven calculator to check how far a price has to move before such costs are covered.
Related
- Spread, slippage, and liquidityStage 2
- Finding a reputable brokerStage 2
- Comparing brokersStage 2
- Matching questions for this stageQuestions