How a trade works from start to finish

On the screen there are two prices for one instrument, and nothing has happened yet. Both are moving, and neither is what anyone will end up paying, because a price on a screen is an offer to deal that lasts as long as it lasts. Between that screen and a closed result stand five stages: the quotation, the order, the fill, the open position, and the close. Each has its own arithmetic, its own costs, and its own way of going differently from what was expected.

This lesson walks that line once and stays deliberately shallow. The nine modules that follow are the depth: each takes one stage apart and spends a dozen lessons inside it. Reading the whole line first is what makes it possible to tell, later, which part of a trade a given lesson is talking about.

The quotation, before anything is decided 

A tradable instrument is quoted with two prices rather than one. The lower is the price at which the market will buy, the higher the price at which it will sell, and both are published at once by whoever is willing to stand on each side. Direction decides which applies: a position on the side that gains from a rise opens at the higher price and later closes at the lower, and the other side does the reverse. The difference between the two is the spread, and it is the first cost of the sequence.

The consequence is structural rather than incidental. A position that opens on one side of the quotation and closes on the other begins behind by the width of that quotation, before the market has moved at all. Commission sits alongside it and financing sits on top of it again. What each of those costs is, and what they come to across one complete round turn, is the whole of the costs module.

The order is an instruction, not a trade 

An order is a set of fields describing what is to be done and under what conditions: the instrument, the direction, the size stated in contracts, the type of order, and optionally an instruction to close the position automatically if price reaches a stated level. Size carries arithmetic of its own, because a contract means a different quantity of the underlying in each asset class, so one stated size produces a very different notional value on a currency pair than on an index. Orders are entered through the platform the account runs on. YAL accounts run on MetaTrader 5, and one account runs on one of them rather than on both.

Order types differ in exactly one respect: what has to be true before the instruction becomes executable. One type asks for execution against whatever the market is showing when it arrives. Others lie dormant until price reaches a level stated in advance, and differ from each other in whether that level sits above or below the current price, and in whether reaching it executes at any available price or only at a specified one. The trade ticket module gives each type a lesson, and closes on what an order does not do, which is the part most often assumed rather than checked.

The fill is what actually happened 

Sending an order and holding a position are two events separated by a short interval, and what happens inside it has its own name. The fill is the price at which the instruction was actually executed and the time at which that happened. For an instruction asking for immediate execution, the fill is whatever the venue can do at that instant, which is not necessarily the price displayed a fraction of a second earlier. That difference is slippage. It runs in both directions, and it describes a price that moved while a message was in flight rather than a fault in the sequence.

Whether an instruction can be filled at all, at what size, and how far from the displayed price, depends on how much interest is resting in the market at that moment and on how the firm receiving the order handles it. That is the subject of the market structure module: where a price comes from, how the liquidity behind it is assembled, and what an execution statistic does and does not measure.

What an open position does to the account 

The moment a fill is returned, several fields on the account change at once, and none of them is a movement of money. Part of the account is set aside as collateral and reported as used margin, which reduces the free margin available to support anything else. The position is revalued against the current quotation on every tick, and that running figure is unrealised profit or loss. Equity is the balance adjusted by it. The balance itself does not move while a position is open. It moves once, at the close.

The collateral set aside is a percentage of the notional value of the contract, and that percentage is the margin requirement. Because profit and loss are calculated on the full notional value while only a percentage of it has been posted, an adverse move is measured against the whole contract rather than against the collateral, so a loss can exhaust the margin posted and is not limited to the amount deposited. A favourable move is measured on exactly the same basis and to exactly the same degree. The margin module takes each of these fields in turn, one lesson per field, then follows two scenarios down to close out.

Time, and what it costs 

A position held past the daily cut off is carried into the next session, and carrying it has a price. Because the full notional value was never funded, a financing adjustment is applied for each night the contract stays open. It is a credit on some positions and a debit on others depending on the instrument and the direction, and on most it is small enough to ignore over a day and large enough to matter over a month.

The hours through which a position is held are not neutral either. Trading interest concentrates in the overlaps between the major sessions and thins outside them, and a thin market is one in which the quotation is wider and a fill lands further from the displayed price. Scheduled economic releases compress a great deal of movement into a known minute. The sessions module treats the trading day as a structural fact, and the macro module treats the calendar as a schedule of volatility.

How a position ends 

A position ends in one of four ways, and none of them is passive. An instruction can be sent to close it at the prevailing price. An instruction attached earlier can reach the level stated in it and close the position without further input. The counterparty can close it under the account's own close out mechanism when the margin level falls to the published threshold, which at YAL is 50%. And a contract written on a futures market inherits that market's calendar, so it carries a stated expiry on which it is closed or rolled. The margin module covers the third case in detail, because it is the one that happens without anybody choosing it.

Whichever route ends it, closing is not a sale to a third party. It is the equal and opposite contract, entered with the same firm, so the two net to nothing and what remains is the difference between the price at which the first was opened and the price at which the second was written. The unrealised figure becomes realised at that moment, and the balance moves once, by that amount, net of commission and of any financing already applied.

The closed line on the statement 

The last stage is a record rather than an action. A statement lists each fill with its price and timestamp, each commission, each financing adjustment and each realised result, and it is the only place the whole sequence is visible as one object rather than a series of screens. It is also the evidence in any dispute about what was executed and when, which is why the final module treats records as a rights topic rather than as administration.

Where the rest of the curriculum sits on this line 

Nine modules follow this one, and each lives at a specific point in the sequence above. A lesson read without knowing which stage it belongs to is much harder to place.

• The trade ticket sits between the quotation and the fill: reading a quotation, the unit of price movement, contract size, and one lesson per order type.
• Margin and account mechanics sits inside the open position: one lesson per field on the account panel, then two scenarios followed down to close out.
• What a trade actually costs runs the length of the line: spread at the open, commission at both ends, slippage at the fill, financing for each night held, conversion at settlement.
• The venue and your counterparty sits behind the fill: where a price comes from, how liquidity is assembled, how an order is routed, and what regulation does and does not cover.
• When the market moves and Macro and the calendar both sit in the holding period, one describing the structure of the trading day and the other the events that concentrate movement into known minutes.
• Reading the chart sits before the order is written, and is the only module that describes past prices rather than mechanics.
• Risk, plan and practice sits across the whole line, because a size decided before the order is sent determines what every later stage can do to the account.
• Staying safe and your rights sits outside the sequence: verifying a firm, recognising the standard fraud patterns, keeping records and raising a complaint.

Why mechanics comes before analysis here 

The ordering of this curriculum is a choice, and not the only one in circulation. Most retail education opens with charts, patterns and indicators, on the reasonable ground that they are what a beginner came for and that interest carries a reader further than duty does. The counter argument, which this curriculum follows, is that every stage above operates whether or not a chart was consulted, while a chart operates on none of them. A position can be sized wrongly, filled away from the displayed price, carried through a financing charge and closed by a close out mechanism without any analysis being wrong at any point.

Both positions are held by experienced practitioners and neither has been settled by evidence, since no comparison of the two teaching orders exists that anyone should rely on. What can be said without dispute is narrower, and is enough: the fields on an account panel, the width of a quotation and the level at which a position becomes liable to be closed are facts checkable in a document, while the predictive content of a chart pattern is contested by the people who use it. The charts module arrives in full later, with the conditions under which each pattern fails stated alongside it.