Hours of operation
The stock markets operate from Monday to Friday, with their respective holidays. In Europe, the main stock exchanges (Amsterdam, Paris, London, Germany) open at 9:00 a.m. Dutch time, and close between 17:30 and 17:40. U.S. markets are open from 15:30 to 22:00 Dutch time.
DEGIRO allows orders to be placed even after trading hours but will be executed when the market opens on the next trading day.
Values
In the financial context, a security is a document that certifies the possession of a financial instrument, the most common are:
- Shares – which are securities issued by companies, when you buy a share you are buying part of a company.
- Debt bonds – these can be from countries or companies, basically it is a promissory note where a company or government gives you an interest for lending them money.
- Financial derivatives – futures, options and swaps – are contracts between two parties. Futures are used to lock in prices at a specific future date; options are contracts that give you the option to buy a company’s stock on a certain date at a certain price; swaps are contracts for the exchange of goods or currencies between two institutions for a specific period of time.
I have only traded stocks and ETFs of stocks, metals and bonds, I have not yet gotten into derivatives because I don’t really understand how they work. In Mexico, government bonds are the famous CETES.
Market volume
Stock market volume is the amount of securities traded or money moved each trading day on the stock exchange.
Keep in mind that the stock market is a market governed by supply and demand, take this into consideration when you want to buy a stock, ETF, etc. The most popular stocks or ETFs are bought and sold by many people during the day, this is called having volume. There are other products that are not so popular and therefore there are less people who want to buy or sell it, if a product does not have volume you have to take it into account because it can be the situation that when you want to sell it is difficult to find someone to buy it.
Order types and commissions
To buy securities on the stock market you have to give an order to your broker, in the past you would phone your broker and tell him what you wanted to buy and at what price. Today this is done online. In your broker you will find several types of orders, the most common being Limit Order and Market Order.
- Limit order is an order in which you set the price you want to pay for the security you are going to buy, or the price you want to pay for the security you are going to sell. The order is executed when someone bids the price you set. If no one bids that price then your order is not executed.
- Market order is an order that is executed at the current price of the security, in theory the broker looks for the best price at the moment and is the price at which you buy/sell.
The broker charges you a commission for each order, i.e. you pay commissions every time you buy and sell something, this must be taken into account especially if you invest with little money, as it can impact the expected returns.
These were some of the doubts I had when I started investing or that I learned by trial and error, if I think of more things I will add them to this post.
