Module 7

• Open a TRADING ACCOUNT with your chosen stockbroker. Like the process of opening a bank account, representatives of the chosen stock brokerage Company will require you to

  fill out a Customer Account Information Form or CAIF.
• Discuss with your stockbroker the stocks you wish to BUY or SELL. After opening a trading account, you can now start discussing with your stockbroker
• Give ORDERS to the stockbrokers. Placing an order to buy or sell a stock can be done by making a telephone call or sending an SMS to your stockbroker. can also be placed directly online via the Internet
• Receive PAYMENT.
• Over the phone (call or text message). The most traditional way to post a buy or sell order is by making a telephone call to your stockbroker and get firsthand advice from him.
• Online. Investors with online trading accounts post their buy or sell order via the Internet using the online trading platform of an online stockbroker.
• Face-to-face (walk-in). Some stockbrokers have their own investors’ trading lounges where you can monitor stock price fluctuations through viewing facilities and at the same time, personally post a buy or sell order through a trader.
• Market Order is the buying or selling of stocks without a specified price, or immediately at the prevailing market price when the order is executed, whatever the price may be
• Limit Order is entered with a specified price known as the limit price. This allows investors to buy or sell at their desired buying or selling price levels. The primary difference between a market order and a is that the stockbroker cannot guarantee that the former will be executed at a specific
• Market on Opening/Closing Order is accepted only during pre‐open and pre‐close periods and executed at the opening/closing price of the instrument.
• Stop Orders are triggered when a specified price limit is reached. It becomes a market order as soon as its trigger price limit is reached.
• Stop Loss Order. stays inactive and is not displayed in the market until a trade occurs at the order’s trigger price. It is immediately treated as a Market Order when the order is triggered. It specifies only the trigger price.
• Stop Limit Order. is the same as the stop loss specifies two prices: the trigger price and the limit price, which must exceed the limit price.
• Day Order (DAY). is valid until the end of the trading day only. If the investor’s buying or selling order is not matched during the

  day, this will automatically be cancelled and will have to be reposted by/for the investor on the next trading day.
• Good Till Cancelled (GTC). Good Till Cancelled is valid until cancelled by the investor or trader or until it has reached the set expiration date of the security.
• Good Till Date (GTD). Another most frequently used limit order is the which is valid until the date specified by the investor.
• Good Till Week (GTW). is a type of limit order which is valid for seven (7) calendar days. If unmatched within seven (7)

  calendar days, the buy or sell order will

  automatically be cancelled and will have to be reposted by the investor though his trader or through his online trading account.
• Sliding Validity (SLIDING). Sliding Validity Order is valid for 360 calendar days from the time it is posted.
• Fill-and-Kill (FAK). also referred to as ‘Execute‐ and Eliminate Order’, is valid upon execution. Fill‐ and‐Kill orders require the stockbroker to instantly execute a trade at the quoted market
• The Board Lot Table Trading of stocks is done by or round lot system. determines the minimum number of shares one can purchase or sell at a specific price range.
• STOCK EXCHANGE. is an organized marketplace or facility that brings buyers and sellers together and facilitates the sale and purchase of stocks. operating in the country is the Philippine Stock Exchange, Inc. (PSE).
• Investors, also referred to as stockholders or shareholders, are those who own shares of stock of a publicly listed company. They

  are accorded certain privileges like the right to fair and equal treatment, the right to vote and exercise related rights, and the right to receive dividends and other benefits due to

  stockholders. They are classified as either retail or institutional, and local or foreign.
• STOCKBROKERS. A trading participant is licensed by the Securities and Exchange Commission (SEC) and is entitled to trade at the Exchange. They act as an agent between a buyer and seller of stocks in the

  market.
• CLEARING HOUSE. The SCCP is a wholly owned subsidiary of the Exchange. It was established to ensure the orderly settlement of equity trades executed at the PSE.
• DEPOSITORY. “custodian” of listed shares of

  stock that are traded at the PSE. It was organized to establish a central depository in the Philippines and to implement scripless trading.
• SETTLEMENT BANKS. The PSE has three (3) accredited banking institutions where trading participants make and receive payments for stock transactions.
• TRANSFER AGENTS. The stock is considered the “official keeper” of the corporate shareholder records. The stock provide the issuer or the listed company with a list of holders of its securities.
• Electronic Board, the center of attraction inside the trading floor of the Exchange, displays all current stock prices, volume, and other relevant information. All prices shown on the are intraday values.
• ASK – displays the lowest selling price in the market
• CLOSE – displays the closing price of the trading day
• VOL – or volume refers to the total number of stocks transacted in the stock market during a given period of time
• L/T – last traded price refers to the price at which the stock was last traded; also referred to as the current market value of the
• LOW – displays the lowest price traded for the period
• BID – displays the highest buying price in the market
• OPEN – displays the opening price of the stock for the day
• NAME – displays the stock symbol of the listed company
• HIGH – displays the highest selling price in the market
• Choose your STOCKBROKER. At present, there are more than a hundred stock brokerage companies to choose from. When you choose you need to consider the type of service you will require and who will best suit your needs. You should remember that your is the financial agent that will help you make your invested money grow. are also classified as traditional or online based on the services that they offer.
• Traditional brokers are those who assign a licensed salesman to handle your account and take your orders via written instruction or telephone
• Through an increase in stock price or capital appreciation. It is the difference between the amount you paid when buying shares and the current market price of the stock. However, if the company does not perform as expected, the stock price may go down below your purchase price.