Series 7 Exam: Orders and Trades — Flashcards

The Series 7 exam tests knowledge of order types, execution, and trade mechanics, focusing on market, limit, stop, and stop-limit orders.

Key concepts include order entry, the role of market makerspriority/precedence of orders, and settlement rules. Understanding SLOBS (Sell Limits, Buy Stops) and BLISS (Buy Limits, Sell Stops) for price positioning is essential. 

Key Order Types & Trade Concepts for Series 7
Market Orders: Executed immediately at the best available price; no price restriction.
Limit Orders: Executed only at a specified price or better (lower for buy, higher for sell).
Stop Orders (Stop Loss): Triggered when a stock hits a specific price, becoming a market order. Used to protect profits or limit losses.
Stop-Limit Orders: Triggered when the stop price is hit, but becomes a limit order rather than a market order.
Order Positioning (SLOBS/BLISS):
SLOBS: Sell Limit and Buy Stop orders are placed Over (above) the current market price.
BLISS: Buy Limit and Sell Stop orders are placed Below (below) the current market price.
Execution Priorities: Generally, orders are filled based on price, then time, then size.
Solicited vs. Unsolicited: A solicited trade is initiated by the broker, while unsolicited is initiated by the client. 

Trade Mechanics
Types of Quotes: Bid (price to sell) and Ask/Offer (price to buy).
Trade Confirmation: Broker-dealers must send confirmations detailing the security, price, and settlement date.
Order Adjustments: Orders placed below the market (Buy Limits, Sell Stops) are reduced by the dividend amount on the ex-dividend date.