ANSWERS: 1
  • Most online brokers own a large volume of stocks. When a customer purchases (or sells) stock through their broker, they are usually just buying (and selling) stock from the broker. This allows brokers to make transactions instantaneously, rather than all orders actually having to go to the trading floor of the stock exchange. This gives great benefits to the customer as they usually can purchase (or sell) stock at the exact price quoted by the broker. This also helps lower overall commission fees as the broker simply transfers ownership instantaneously via electronic transactions. Imagine if *all* individual's buy/sell orders all around the world had to be made on the floor of the NYSE. That would be madness! But if the stock you wish to purchase is not already in your broker's inventory, they will need to purchase "on the floor", which can sometimes take a while. Since this process is not instantaneous, the price of the stock may fluctuate quite a bit before the order is filled. Hope this helps.

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