How Trades Are Executed

Name: How Trades Are Executed
Uploaded: 2026-04-27
Duration: 5 min
Description: What actually happens between clicking 'buy' and owning a share? A short walkthrough of the five stages every stock order travels through — order creation, your broker's best-execution duty, routing across exchanges and market makers, the matching engine, and T+1 settlement at the clearinghouse — that demystifies the hidden machinery behind a 'one-click' trade.

1A stock trade isn't instantaneous — execution feels immediate but settlement (T+1) takes a full business day through a clearinghouse like the DTCC
2Your broker has a regulatory 'best execution' duty — they must seek the most advantageous terms, balancing price, speed, and likelihood of fill
3Orders can route to multiple venues: stock exchanges, market makers, broker internalization, or ECNs — depending on execution quality
4Order type fundamentally changes what happens next: market orders execute immediately, limit orders wait in the book for your price
5Market makers earn the bid-ask spread for providing liquidity — they're the reason there's almost always a counterparty when you click trade

Key Takeaways