Financial Markets & Market Mechanics Financial Terms & Definitions

26 terms in this topic

Financial Markets & Market Mechanics encompasses the various platforms and systems where securities, currencies, and other financial instruments are bought and sold. It includes explanations of market types such as primary and secondary markets, exchange and over-the-counter trading, and key concepts like liquidity, order types, and price discovery. Understanding these mechanics is essential for grasping how asset prices are determined and how transactions are executed.

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Liquidity

Liquidity is a financial concept that describes how quickly and easily an asset can be bought or sold in the…

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Order book

An order book is a real-time, electronic list of buy and sell orders for a specific financial security, such as…

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Spread

The term “spread” in financial markets refers to the difference between two prices, rates, or yields. It is a fundamental…

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Limit order A limit order is a type of order to buy or sell a security at a specific price… Liquidity Liquidity is a financial concept that describes how quickly and easily an asset can be bought or sold… Margin account A margin account is a type of brokerage account that allows an investor to borrow money from their… Market maker A market maker is a financial firm or individual that continuously quotes both a buy (bid) and sell… Market order A market order is an instruction to buy or sell a security immediately at the best available current… Order book An order book is a real-time, electronic list of buy and sell orders for a specific financial security,… Over-the-counter (OTC) Over-the-counter (OTC) trading refers to a decentralized market where financial instruments are traded directly between two parties, without… Primary market The primary market is the financial market where new securities, such as stocks and bonds, are created and… Secondary market The secondary market is a financial marketplace where investors buy and sell previously issued securities, such as stocks,… Settlement (T+1) Settlement (T+1) refers to the standard timeline by which a securities trade must be finalized after the transaction… Short selling Short selling, often called shorting, is an investment strategy where a trader borrows shares of a stock and… Spread The term “spread” in financial markets refers to the difference between two prices, rates, or yields. It is…