A stock symbol is also called an instrument, a security, or a ticker symbol.
A client is also called a moniker or a counterparty.
A broker firm is also called a counterparty, a market maker, or a broker/dealer.
When a stock is $30.20, it is pronounced “thirty-spot-two-zero.”
When a stock's symbol is described over the phone, it is spelled out via the NATO phonetic alphabet. For example, MSFT is spelled out “Mike Sierra Fox-trot Tango.” This is primarily because it is not always easy to make out the letters over the telephone. One should not spell out a stock symbol phonetically over an email or IM as it is unnecessary.
A bid is how much a broker is willing to buy a stock at. An offer or ask is how much a broker is willing a sell a stock for. All the offers and bids available publicly (available “on the street”) is aggregated to a single window called the market depth screen, also known as the montage, on the trader's computer screen. The best bid and offer (annotated “best bid/offer”) is known as the inside price, and its difference is known as the spread. For example, if the best bid for a stock is $10.23, and the best offer for the stock is $10.25, it is said that the “inside price is 10.23x10.25” (pronounced “ten-spot-two-three by ten-spot-two-five,”) and it is said that “there is a two cent spread.” If the spread is such that the bid is equal to the offer, the market is said to be locked. If the bid is higher than the offer, the market is said to be crossed. Both locked and crossed markets are not allowed because it is a violation of the market rules, and the market participant that creates the situation is fined by the regulators for creating a confusion in the market.
A bid or an offer on the street is called a quote. When one sees a quote they like and makes a trade, it is said that the trader has swept the market. Conversely, if the trader puts out his or her own quote out on the street, it is said that the trader has posted to the market. Posting to the market is more lucrative because the broker firm receives a kickback from the exchange to which the trader posts for providing a liquidity (cashability of a stock) to the market. On the other hand, exchange will charge a fee for sweeping their exchange for taking away the market's liquidity. The fee is usually small (less than a penny-per-share), but can add up over time.
The monetary unit that is one-tenth of a penny is known as the mill, equivalent to one-thousandth of a dollar. This is a real monetary unit that has gone out of circulation in the 1960's, but the term is still used in the stock market, and this unit of money is still used at the gas pumps. A stock that trades at dollar-per-share or lower will generally trade at increments of mill or smaller. Most stocks that trade at the main exchanges (NYSE, AMEX, Nasdaq) trades at greater than dollar-per-stock so they will trade in increments of a penny, but stocks that trade at Pinksheet and Bulletin Board exchanges (a.k.a. “pink” or “bully” stocks) will often, but not always, trade at a dollar or less per-share so they will trade in sub-penny increments.
When an order is sent to an exchange or another broker to be filled, it is said that the order is routed to a venue or simply “routed out.” When the venue makes a trade as a result of the order, the order is said to be filled or executed, and the trade on the order is called a fill or an execution. When a trade is done on the order, the trade notification is sent back to the originator of the order; such notification is called a notice of execution or NOE. An order may be partially filled until it is fully filled or cancelled. An order's parameters may be changed while it is being worked by the broker, and such request is called an amendment or a cancel/replace.
The party sending an order to a broker is called the buyside. The party that receives an order for fulfillment is called the sellside. A broker firm may be a buyside as well as a sellside if the firm receives an order from a client (the client is the buyside, the broker firm is the sellside) then sends it to an exchange to be executed (the broker firm is the buyside, and the exchange is the sellside.) Any trade done by the sellside is called the street trade or the streetside trade and it cannot be cancelled.
A street trade, once made, cannot be cancelled. However, a notice of the execution may be sent in error to the client which may be cancelled or amended by the sellside. Thus, a trade is always cancellable by the sellside but never by the buyside. However, the buyside may DK (DK = “Don't Know”) a trade if the trade does not meet the buyside's criteria, such as the limit price of the order.
Sometimes a sellside will see an opportunity to trade on behalf of a buyside without explicitly receiving an order from the buyside. A sellside may do this for clients that they know well. In a such case, an electronic notice may be sent to the buyside informing them that an order has been placed on their behalf; such order is known as an unsolicited order or an one-sided order, and will usually be followed by a series of trade notifications. If unsolicited trade notifications are sent to the buyside without any order notifications, then the trade is said to be a dropcopy trade, or simply a “trade drop.” Unsolicited orders and trades may be DK'ed if the buyside has their system configured to reject them.
Series 7 Exam is an exam one takes to become a licensed trader. One must be sponsored by a licensed broker firm in order to become eligible to take the exam.
Any stock that is listed at NYSE (The New York Stock Exchange) or AMEX (The American Stock Exchange) are said to be listed. The NYSE and AMEX are special because they involve real people when trading their stocks. All other exchanges are electronic exchanges, and such exchanges are considered to be non-listed, or OTC (over-the-counter,) exchanges. OTC exchanges include the Nasdaq, Pinksheet, and Bulletin Board (or simply “bully”) exchanges.
A specialist is a person on the floor of a listed exchange who is in charge of a specific set of stocks. Any trade done on the exchange floor for those stocks must go through the specialist. The specialist is in charge of keep the market under control, preventing any sudden changes in a stock's prices. The specialist is authorized by the company represented by the stock to represent them.
A floor broker or a $2 broker is a trader on the floor of a listed exchange. Such broker will take orders electronically or via the telephone and trade with the specialist. They do not have desks or cubicles but instead have booths with some computing and telecommunication abilities. When sending an order to the floor broker, one needs a booth code in order to be able to send the order to the floor broker's booth.
A market maker (“MM”) is a broker firm that specializes in trading a specific stock. For example, a broker firm that specializes in trading MSFT is said to be a “market maker in Microsoft,” and will assign a specific trader to be the specialist in Microsoft. A Market Maker is allowed to trade the stocks for itself and can even have a short position in the stock (have sold more shares than they had, thereby having negative shares in their inventory,) but the market regulation requires them to always have a reasonable quote available to the public and always honor the inside quote prices when filling a client's order. An agency shop, on the other hand, is a broker firm that never makes a market in any stock.
A sales trader is a trader who receives a client's order and gives it to a trader to be worked. The sales trader's role is important because his/her relationship with the client determines the firm's profitability.
An analyst is someone who analyzes the condition of the market and determines whether to buy or sell a given stock or a category of stocks. An analyst will specialize in a given market sector and specializes in understanding a handful of specific companies. The analyst will suggest whether a firm should be long (have shares in its inventory) or short in the stock (sell more shares than is available in its inventory by borrowing the stocks from another firm.)
“Street” is a term that refers to the general public. Wall Street, in particular, refers to the players of the stock market, including the stock brokers, the broker firms, the CEOs of major corporations, etc. The Main Street refers to the rest of the public, such as the economy population in general that may not interact directly with the stock market.
