As
an investor, you probably would like a clearer sense of how the
amounts you pay for investments you buy — and what you receive
when you sell — are determined. That may be especially true
if the market price you're quoted when you place an order
is lower than what you end up paying or higher than you actually
realize.
There are reasons for unanticipated changes.
Prices can be extremely volatile in what's known as a fast-moving
market. The more trades that take place in a particular stock
or in the market as a whole, the slower execution may be and the
more likely the price will change somewhat. So volume may contribute
to paying more or selling for less.
And while market centers strive to keep their
technology ahead of potential demand, there are times when their
limits are tested by outside sources, such as a power failure.
Events such as these may slow your trade and affect your price
as well — but they're not the ones that you're
likely to be bothered by.
Other issues may not be as obvious as a sudden
jump or drop in price, but they also have an effect on what you
pay to invest and on your return.
Ahead of the pack
The rules of exchange trading require that orders be filled in the order they are received, and that a client's order must be filled ahead of an industry professional's order.
