Finance

Definition:

Terms:

• Paper: interested parties trading against Market maker
• Broker: person/company that acts as intermediary between buyer sand sellers
• Tick size: smallest increment between one price level to the next. ex: 1 stock = 100.01, next level is 100.02 → tick size is 0.01

Bid vs Ask:

• Bid: Highest price for which someone is willing to buy
• Offer/Ask: Lowest price for which someone is willing to sell
• → Spread: Bid price - Ask price

Orderbook

• 
• Ask on top, bid at the bottom with sizes
• Queue Priority: in 1 price level, there can be multiple Maker orders, so it will be ordered by time that order is created. The Taker only see one block

Order types:

• Immediate or Cancel order (IoC, Fill-and-kill FAK): requires that all or part of the order be executed immediately, doesnt remain on waiting
• Good for Day order: remain active until executed (in part of full) or until end of a day
• Good-till-cancelled order: remain active until completed or canceled
• All-or-None order: must in filled in full or not at all, remain on book until adequate size comes on book from makers
• Fill-or-kill order: must in filled in full or canceled immediately
• One Cancels the Other (OCO): If one order/market is executed, the other is automatically cancelled

Hedge