Trade
Family X · Account mechanics
Not to be confused with trade size, cfd trade, stop loss trade.
Trade is the execution of an order that transfers ownership or exposure between two parties at a specified price and quantity. Once filled, the transaction is reported to the relevant venue or counterparty and becomes part of the market record. A trade is distinct from the order that requested it, which may be modified or cancelled before execution.
How a trade is formed
A trade occurs when a buy order and a sell order match on price and quantity. Matching may happen on an exchange, through a dealer, or internally within a broker's book. The resulting transaction has a timestamp, a price, a size, and a direction from each participant's perspective.
For every buyer there is a seller, so the number of contracts or shares traded equals the sum of both sides. Reported volume counts each unit once, not twice.
Worked example
A trader buys 500 shares at £12.40 and later sells them at £12.65.
Commissions, taxes and any spread costs are deducted separately and vary by venue and jurisdiction.
Settlement and reporting
Execution and settlement are separate events. A trade is executed when matched, but ownership transfers only after settlement, which may occur on the same day or several days later depending on the instrument and market convention.
Regulators require trades in listed instruments to be reported to a trade repository or exchange feed. The reporting deadline and the fields published differ by jurisdiction and asset class.
Often confused with
- trade size
- Trade size is the quantity of units in a single transaction, not the transaction itself; it is the number that appears in the size field of a trade record.
- cfd trade
- A CFD trade is a contract for difference that creates exposure to price movement without transferring the underlying asset, whereas a trade in the underlying transfers ownership or a direct claim; the visible sign is whether settlement involves delivery of the asset or a cash adjustment.
- stop loss trade
- A stop loss trade is an order type that becomes a market or limit order when a trigger price is reached, not a completed transaction; the visible sign is the presence of a trigger condition in the order ticket rather than a filled price and quantity.