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New to trading. I came across the concept of an "Order Book".

MY UNDERSTANDING

My understanding (when going LONG) is that a trade ONLY takes place if the BID Amount >= the ASK Amount - ONLY.

In the other words, if the ASK Amount is $400 and the BID Amount is $399.99, the order will not go through.

If the ASK Amount is $400 and the BID Amount is $400.01, then the order will go through

SITUATION (YESTERDAY)

This took place YESTERDAY

Suppose there is a person selling 4000 coins for an ASKING price of $4000 ( $1.00 per coin ). His order is far from the Market Value Line (not close to it at all)

I would only want 300 of those coins (not all 4000).

I see his order in the book.

I put in my BUY order of 300 coins for $1.01 per coin.

SITUATION (TODAY)

There are a lot of BUY orders. The 4000 Coin Order is getting close the Market Value Line.

So the question is: When the 4000 coins are being sold, which buyers will go first? What algorithm is used to determine who gets to buy first, who gets to buy second, etc?

My hope is that with my order being $1.01 per coin, I would be "somewhere in line" - but - it would be good to know. How exactly is the line formed? Which BUYER would have their order honored/filled first?

  • Is it by time (the earliest BUY order created)?
  • Is it by some factor that the Exchange uses (i.e. the person with the biggest Account, the person who executes the most orders on the Exchange, Youtube Influencers, etc.)
  • Is it by the Order that offers the Amount closest to the what the ASKING person wanted? (ex: I may offer $1.01 per coin when I first saw that the coins were being sold - which could have been yesterday - but - would my offer be rejected NOW(i.e. today) by someone who offered $5.00 per coin NOW (i.e. today) )?

WHAT I AM SEEKING

Looking at it another way, suppose the coins have just "dumped" and is going down very fast - but - there are also some short pauses on the way down. I am sure that there are a number of "Stop Orders" that could be executed (my assumption for the reason for the "short pauses").

Even so, some "stop orders" are executed (during the pause) while others are not.

Is there some queue involved? If so, how is the queue ordered?

Any answers, clues, hints or suggestions would be greatly appreciated.

TIA

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    In "your understanding" - is the $399.99 order per coin? If so, then in the "yesterday", why would anyone put in a sell order for $1 per coin when they could sell it immediately for $399.99?
    – D Stanley
    Commented Mar 3, 2022 at 17:23
  • "is the $399.99 order per coin?" - sorry for the fuzziness. Ironically, I tried to be clear when creating the message. Anywho, the answer is "no". The guy is selling 4000 coins for $1.00 each. I see his order and would like to buy his coins for $1.01 each. But again, I only want 300 coins. So, I would be offering him a total of $303.00.
    – Casey Harrils
    Commented Mar 4, 2022 at 13:57
  • @CaseyHarrils You do not make offers for a particular person's coins in that way. Alice has placed a buy order with a bid of $1.00 each. Bob has seen this and placed a sell order with an ask of $1.01 each. Nothing happens. If Alice subsequently places a buy order with a bid of $1.05 each, the exchange will see that Bob's ask of $1.01 is less than that and fulfill some/all of Alice's order at that price before putting the rest of Alice's order on the order book.
    – Jivan Pal
    Commented May 30, 2022 at 13:59
  • @CaseyHarrils For example, if Bob's sell-order was for 2 BTC @ $1.01, and Alice's subsequent buy-order was for 10 BTC @ $1.05, she would immediately get 2 BTC @ $1.01, paying $2.02 and fulfilling Bob's order; and then Alice's remaining 8 BTC @ $1.05 buy-order would be placed on the order book.
    – Jivan Pal
    Commented May 30, 2022 at 14:00
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    @CaseyHarrils To answer your question about who goes first if multiple orders could be fulfilled: the queue is not based on order placement time, it is based on bid/ask price. Among buyers, the highest bidder gets priority. Among sellers, the lowest asker gets priority. If you want to get there first, increase your bid.
    – Jivan Pal
    Commented May 30, 2022 at 14:04

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