Grappling with the Ins and Outs of Securities Markets
In This Chapter
Getting the lowdown on pricing
Understanding the importance of liquidity
Routing an order
Knowing how a securities market functions is important to understanding how dark pools work. In fact, dark pools function much in the same way as traditional stock exchanges, including bid and offer, liquidity and market makers. If you have a basic knowledge of traditional stock exchanges then you should have little trouble grasping how dark pools generally work. This chapter takes a closer look at the similarities between traditional securities market functions and dark pools.
Figuring Out Pricing: The World of Bids and Offers
Dark pools and the stock market are similar when it comes to pricing. Each one is a giant auction house where investors and traders try to buy or sell at the best possible price. As long as the exchange is open, trading can be done constantly.