The screen says $10. Why did buying 100 shares cost $1,003.20? Before looking for a hidden fee, consider that the same result could occur with no commission at all.
Zhou has chosen a company to investigate, but the last step raises another question. Is the screen showing a price at which someone recently traded, or a price at which someone will sell to her now? Five small orders reveal how that difference affects costs and why an apparently harmless fill assumption can change a backtest.
What you will be able to do
- Read the relevant side of a quote and explain what market and limit orders control.
- Account for unfilled orders, partial fills, gaps, and cancellation confirmations.
- Distinguish execution from settlement and save explicit assumptions for an investment study.
Focus on how many shares trade under which conditions. Complex orders and borrowing strategies are outside this exercise. You only need an initial understanding of routing, account financing, and settlement to recognize where further checks are necessary.
Whose $10 price is it?
An order is a request with conditions. “Buy 100 shares” still leaves questions about price limits and how long the request remains valid. The broker receives it and arranges execution. A submitted status confirms that the request was sent; it is not a fill confirmation. Record the outcome rather than inferring it from the button you pressed. [1]
The last trade records a recently completed transaction. A bid is a buyer's quoted price; an ask is a seller's quoted price. Zhou buying shares needs a seller, while Zhou selling shares needs a buyer. Treating the last trade as a price available in both directions ignores the other side of the transaction.
All quotes, stocks, and fills below are synthetic, in U.S. dollars. Each order is an independent scenario; quotes do not carry over between them. Assume no hidden quantity, price improvement, competing orders, or additional quote changes unless specified. This is a model designed for checking arithmetic, not a complete exchange matching system or an execution guarantee.
The first snapshot has a last trade of $10.00, highest bid of $9.98, and lowest ask of $10.02. The bid-ask spread is $0.04. The midpoint happens to be $10.00, but that does not guarantee a trade there. The lowest ask offers only 60 shares; another 40 are offered at $10.05. Quantity belongs alongside price. In real markets, displayed quotes can change and undisplayed liquidity can exist. [2]
Order one: buy the full quantity at available prices
Zhou submits a market order for 100 shares. A market order seeks execution at available market prices without a price guarantee. For this exercise, additionally assume that the market is executable and the entire order fills. The given sell-side quantities determine the arithmetic. [3]
The first 60 shares cost 60 times $10.02, or $601.20. The remaining 40 cost 40 times $10.05, or $402.00. Total cost is $1,003.20. Dividing by the 100 shares gives a quantity-weighted average fill price of $10.032. That average need not equal any one displayed quote, because it summarizes multiple fills.
Suppose the study chooses $10.00 as its arrival-price reference. Buying 100 shares at that reference would cost $1,000, so the actual fill is $3.20 less favorable. This is a difference relative to a selected reference, not necessarily a fee on a brokerage bill. A fill-price difference is often described as slippage; changing the reference time or price can change what you measure.
Commissions, taxes, and other explicit fees are zero here, making the cash outflow $1,003.20. In real work, inspect applicable charges separately. If the $3.20 difference already measures actual fills against the reference, do not add the same spread again as though it were an independent cost. A cost record needs both the amount and the definition that produced it.
Zhou's mistake was not multiplying 100 by 10 incorrectly. It was assuming that all 100 shares could trade at $10.00. The explanation combines price with available quantity. Keeping those together is more useful than treating the difference as an unexplained rounding problem.
Orders two and three: control price, accept missing shares
In the second independent scenario, asks again begin at $10.02. Zhou submits a buy limit order for 100 shares at $10.01, meaning she will not pay more than $10.01 per share. Assume nobody sells to that order at $10.01 or lower during its life. It fills zero shares and is confirmed expired at the end.
A buy limit order can fill only at its limit or lower; a sell limit order only at its limit or higher. Those conditions do not guarantee execution. Zhou has excluded an unacceptable buy price while accepting that she might not obtain the shares. A later price increase cannot be recorded as a gain on shares this order never bought. [3]
The third scenario raises the buy limit to $10.02 and uses the first snapshot's sell-side quantities. Explicitly assume this order receives the opportunity to buy the 60 offered shares at $10.02. It spends $601.20. The remaining 40 cannot trade at $10.05 because that exceeds the limit. Assume no additional eligible supply arrives; the remainder is eventually confirmed expired.
This is a partial fill. The requested quantity is 100, but the resulting holding is 60. The other 40 belong neither in the holdings used to calculate returns nor in cash expenditure. Save requested quantity, cumulative filled quantity, average fill, and remaining status separately. The original order size cannot substitute for any of these outcome fields.
Real execution also involves queues. Seeing $10.02 on a chart does not prove your entire order would have filled. Someone else may have traded a small quantity first; arrival time, queue position, quantity, and routing can matter. A daily low touching a limit price does not reconstruct those details. If the dataset lacks them, the study must acknowledge what it cannot establish.
Orders four and five: a gap can cross your exit price
Now switch to selling. In the fourth independent scenario, Zhou already owns 100 shares and submits a sell limit at $9.90. A gap occurs: the executable bid moves directly to $9.50, with no bid of $9.90 or above afterward. The order remains unfilled. It does not automatically sell at the limit merely because the price moved below it.
A gap means tradable prices can cross an interval without providing a sequence of trades at every intermediate price. A limit protects the execution-price condition. It cannot also guarantee a completed exit. Zhou's record must retain the shares when the conditions for a sale are not met.
For the fifth order, she again starts with 100 shares but uses a sell stop-market order with a $9.90 trigger. Assume the broker's trigger condition is satisfied, the order becomes a market order, and all 100 shares sell at the available $9.50 bid. With fees again zero, proceeds are $950.
The trigger price is not a guaranteed fill price. Selling 100 shares at $9.90 would produce $990, so these proceeds are $40 lower. The initial purchase cost is not given; therefore $40 describes the exit-proceeds difference, not the investment's entire loss. A stop-limit order has a separate price restriction and may fail to execute. Check a broker's trigger conventions rather than assuming all implementations are identical. [3]
The five scenarios do not identify an order type that is always best. They make the tradeoff visible. Seeking prompt completion leaves exposure to available prices; insisting on a price condition leaves exposure to incomplete execution. A study that retains only ideal fills has silently removed part of this tradeoff.
Buying power is not household savings
Identify the account type before interpreting what an order system allows. A cash account requires full payment under applicable rules. A margin account can involve a broker's loan secured by account assets, increasing potential losses and creating margin-call or forced-sale risks. This chapter does not rely on a particular regulatory threshold. [4]
Account equity can be understood approximately as assets, under the relevant valuation rules, minus liabilities. Buying power is the platform's measure of order capacity under account, collateral, and order rules. These are different numbers. Buying power above existing cash does not create household savings or establish that the permitted amount can safely bear losses. Interest and liquidation mechanisms require a separate, more detailed investigation.
After submission, check the order identifier, status, filled quantity, and average price. Do not click again to discover whether the first attempt succeeded. A cancellation request also differs from confirmed cancellation: the original order may execute before cancellation is effective. Confirm the result before replacing it, or two orders can fill when you intended only one. [5]
What happens after a fill?
Execution establishes the transaction. Settlement is the formal transfer of securities and cash. As checked against SEC guidance on October 30, 2026, the standard for most U.S. broker-dealer securities transactions has been T+1 since May 28, 2024: one business day after the trade date. Exceptions exist; this is not a statement about every security and transaction. [6]
For a Friday trade, Monday is the standard T+1 settlement date only if it is an applicable settlement business day and no other obstacle intervenes. Relevant holidays require recalculation. Expected settlement is also different from money being available for bank withdrawal early that day. Retrading, withdrawal, currency conversion, and bank arrival have account-specific conditions to check separately.
Write the clock fully too. NYSE's core session is ordinarily 9:30 a.m. to 4:00 p.m. U.S. Eastern Time; holidays, early closes, and other sessions require the relevant calendar. Eastern Time changes with daylight saving, so its relationship to Beijing time is not fixed all year. Other sessions or venues do not automatically share core-session liquidity or available order types. [7]
Bring execution into the research specification
Turn a signal into four questions: When was the information available? When could an order first be submitted? What price and quantity assumptions define a fill? What happens to the remainder? A signal using a day's complete closing data cannot assume advance knowledge and an ordinary fill at that same closing price.
A simplified study might specify signals after the close, attempted execution in the next tradable session, a named price dataset, explicit fees, and an unfavorable fill adjustment. It might retain the existing position when prices or quantity conditions are unavailable. Those are research assumptions, not promises about actual orders. Adequacy depends on strategy frequency, size, and the detail supported by the data.
With daily prices alone, you cannot verify queues or partial fills. Acknowledge the gap and compare more conservative scenarios instead of treating a single price series as a complete execution history. Explicit assumptions are more informative than displaying additional decimal places on a result whose fills have no supporting evidence.
Check the orders yourself
First explain whether the third order's partial fill means the limit failed. Then correct these records: the first order says “100 shares, $1,000, no fee”; the third says “100 shares, $1,002.” Write actual shares and amounts before looking at the answer.
The third order respected its price restriction; eligible supply was insufficient for the full quantity. Order one actually filled 100 shares for $1,003.20. Order three filled 60 for $601.20, and the remaining 40 were confirmed expired. Neither the last trade nor the requested quantity can replace the actual fills in the ledger.
Change the available supply
In a new independent scenario, buy 100 shares with a $10.04 limit. The synthetic asks are 30 shares at $10.02, 50 at $10.04, and 20 at $10.06. Assume the first two levels are available to your order and no further supply arrives before expiry. Calculate filled quantity, amount, and remaining quantity. Can the last 20 be recorded at $10.04?
The first two levels provide 80 shares. Their costs are $300.60 and $502.00, totaling $802.60. Twenty shares remain unfilled because $10.06 exceeds the limit. Changing the order would require a new recorded decision. Do not insert a favorable fill afterward merely to make a research table look complete.
Save an execution-assumptions card
Choose a fictional signal and record information-availability time, market and time zone, account type, side, quantity, price condition, order life, cost convention, unfilled-order policy, and outstanding settlement or withdrawal questions. Use one snapshot here to record actual quantity, amount, and remaining status. Keep the first version.
Check whether the assumed price uses information unavailable at the time, whether the quantity is supported, and whether a cost was counted twice. Mark unclear answers unknown and name the missing material. The card should let another person recompute the outcome and identify what changed when you revise an assumption.
Turn an intention into a checkable sequence
Start by distinguishing a past transaction from a current quote, then inspect side and quantity. Separate intended quantity, actual fills, and the remainder. Price protection, triggers, and cancellation requests each have limits; none can replace a confirmed outcome.
Before calculating returns, reconcile cash paid or received, the reference used to measure costs, and the conditions for settlement and use of funds. Where execution evidence is missing, retain uncertainty rather than awarding a strategy fills the market never promised.
References
- Investor.gov: Executing an Order.
- FINRA: Understanding Disclosure Documents. Spread, liquidity, and execution limits.
- Investor.gov: Types of Orders.
- Investor.gov: Understanding Margin Accounts. Account distinctions and borrowing risk, without changing regulatory thresholds.
- Investor.gov: Online Investing. Execution and cancellation confirmation.
- Investor.gov: New T+1 Settlement Cycle.
- NYSE: Trading Information. Trading hours and settlement statements were checked October 30, 2026; recheck before publication or use.
AI assisted with writing and checks. Human financial review and target-reader testing remain pending. All five orders and the transfer exercise are synthetic.