I see the stock market as a list of orders which have a type (buy-limit, sell-limit, sell stop-loss, ...) a volume, and a price. Some order types have more parameters, but for simplicity I'd like to look only at limit orders.
Now we have a list like this:
(Type, volume, price) ------------------------ ... (BUY, 100, 9.00 EUR) (BUY, 9999, 9.50 EUR) (SELL, 1000, 9.95 EUR) (BUY, 5000, 10.00 EUR) (SELL, 4000, 10.05 EUR) (SELL, 1234, 10.50 EUR) ...
The highest BUY-price is called bid price (10 EUR) and the lowest SELL-price is called ask price (9.95 EUR).
Now I understand if the volume and the amount for a BUY and a SELL order match, then both parties can execute the trade.
But what happens if the price matches, but the volume does not? Is the order partially executed? Are there market participants that take almost matching orders and make them match, e.g. the two SELL orders from above and the one BUY order?
Does it make sense to split big orders into several orders with lower volume?