Trading Securities: Rapid Fire
Chapters in this video
- 0:00 The bid-ask flea market and spread as implicit cost
- 1:25 Order types: market, limit, stop, stop-limit triggers
- 3:02 Agent versus principal: one hat, one fee per trade
- 5:15 Margin numbers: 50% initial, 25% maintenance, liquidation risk
- 7:37 The 5% markup guideline and municipal exemption
- 7:41 Rapid-fire exam recap
What this video covers
- The bid-ask spread as an implicit cost, and why narrow spread means high liquidity while wide spread means low liquidity
- When to use each order type: market, limit, stop, and stop-limit, including the exact trigger mechanics that determine what order a stop or stop-limit becomes
- The strict one-hat rule: why a firm charges a commission as agent (broker) OR a markup/markdown as principal (dealer), never both on the same trade
- The introducing firm versus clearing firm distinction, and what fully disclosed versus omnibus account structures mean for customer identification
- The three big percentages: 50% Federal Reserve Board initial margin, 25% Financial Industry Regulatory Authority (FINRA) maintenance margin, and the 5% markup/commission guideline
- Why the 5% guideline is not a hard ceiling, what trades it covers, and the municipal securities exemption
- Best execution obligations across both agency and principal transactions, and the real risk factors including margin liquidation without prior notice
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