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Basics of Stock Trading
Invest Now
Wealth BuildingStocks, ETFs & Trading
03 Mar 2025  I  3 mins read

Table of Contents

  1. Understanding bid & ask: Why are there two different prices for the same stock?
  2. Understanding spreads: What does the difference between the bid and ask represent?
  3. Market makers and market takers: What do these terms mean?
  4. Understanding orders: What are orders?
  5. How long will orders remain open?

Before you venture deeper into your stock trading journey, this article covers the basics you should know. You can choose to be an occasional trader – buying and selling for a longer-term investment portfolio – or a much more active one where you look to make shorter-term profits.

Understanding bid & ask: Why are there two different prices for the same stock?

  • The bid is the price investors can sell a stock on the open market
  • The ask is the price investors can buy a stock on the open market

Understanding spreads: What does the difference between the bid and ask represent?

  • The difference between the bid and the ask is called the spread
  • Spreads are an indicator of market liquidity: the smaller the spread, the higher the liquidity, and vice versa.

Market makers and market takers: What do these terms mean?

  • Market makers are entities responsible for continously quoting prices in a certain market. They are typically banks or brokerage companies.
  • Market takers are smaller individual participants who can only ‘take’ the prices market makers offer.
  • Price takers buy at the ask price and sell at the bid price, but market makers buy at the bid price and sell at the ask price.

Understanding orders: What are orders?

  • Orders are instructions placed by investors to buy or sell a certain stock
  • It can be made to a broker, brokerage firm or through a trading platform
  • There are 3 basic types of orders: market orders, limit orders and stop loss orders

Market Orders

  • An order to buy or sell a certain quantity of a stock at the prevailing market price
  • Market orders can be filled almost immediately if there is enough volume to meet the order

Limit orders

  • An order to buy or sell a certain quantity of a stock at a specific price (or better)
  • Limit orders are filled only when there is enough volume at the specified price or better
  • For example, an investor sets a limit order to buy Stock X at $100 – the system will only place the order if the price is $100 or less

Stop loss orders

  • An order to sell a certain quantity of stock if it dips to a specific price
  • It is a specific type of limit order used to minimises losses on a stock by automatically selling it once it falls to a certain price
  • For example, if an investor bought Stock X at $100, setting a stop loss at $80 will limit the maximum losses to $20 a share

How long will orders remain open?

There are two types of order durations – good till day (GTD) and good till cancel (GTC).

  • A GTD order will be cancelled at the end of the trading day
  • A GTC order will stay open indefinitely either until the order is executed or the investor manually cancels it.

If you would like to start adding stocks into your portfolio, why not use our Online Trading Platform? Our smart platform gives you access to 14 major stock exchanges across the world, and all with low brokerage and zero custody fees. Try it out today.

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General Disclaimer

This article is for general information only and it does not constitute an offer, recommendation or solicitation of an offer to enter into any transaction or adopt any hedging, trading or investment strategy, in relation to any securities or other financial instruments. This article has not been prepared for any particular person or class of persons and does not constitute and should not be construed as investment advice or an investment recommendation. It has been prepared without regard to the specific investment objectives, financial situation or particular needs of any person or class of persons. You should seek advice from a licensed or an exempt financial adviser on the suitability of a product for you, taking into account these factors before making a commitment to purchase any product or invest in an investment. In the event that you choose not to seek advice from a licensed or an exempt financial adviser, you should carefully consider whether the product or service described herein is suitable for you.

You are fully responsible for your investment decision, including whether the investment is suitable for you. The products/services involved are not principal-protected and you may lose all or part of your original investment amount. Investment products are not deposits and are not obligations of, not guaranteed by, and not protected by the Bank or any of the affiliates or subsidiaries, or by Perbadanan Insurans Deposit Malaysia (“PIDM”), any government or insurance agency.

Standard Chartered Bank Malaysia Berhad & Standard Chartered Saadiq Berhad (the “Bank”) expressly disclaim any liability and responsibility for any loss arising directly or indirectly (including special, incidental or consequential loss or damage) arising from the financial losses of the investment products due to market condition.

For Takaful / Insurance Benefits

The benefit(s) payable under eligible certificate is protected by PIDM up to certain limits. Please refer to PIDM’s Takaful and Insurance Benefits Protection System (“TIPS”) Brochure for more information.

The information stated in this article is accurate as at the date of publication.

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