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I’m a beginner to trading and reading some stuff about Limit & Market orders. I’ve thought up some scenarios and I would like to confirm on how the underlying order book mechanism deals with them.

Let’s take Bitcoin,

Current price is $45,000

Highest bid is $44,990

Lowest ask is $45,010

  • I placed a bid at $45,005. Means I get to “jump ahead of the queue” and any fresh Sell market orders will fill my bid. Am I correct in assuming that?

  • I placed a bid at $45,020 (more than the lowest ask). There’s also a sell limit order at the same price. Does my order only execute against the matching ask order? Or does it execute against the lowest ask order?

    • If the former is true, will the price jump from $45,000 to $45,020?
    • And If the latter is true, can I say that my buy limit order (bid) worked in the same way as a market buy order?

Also, it’s only today that I started reading about this and I’m already fascinated with these ideas. Can anybody please suggest a book that explains the market phenomena and strategies from the order book perspective?

Uchiha Madara
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  • Please take a deep breathe before you plunge into trading the most volatile 'asset' class since the Dutch tulips. BTC has lost 15% in 2 weeks, just to put a perspective on how quickly you can lose everything. – Grade 'Eh' Bacon May 17 '21 at 20:25
  • @Grade'Eh'Bacon Thanks for the reply and advice. I may start trading after at least 6 months. In the meanwhile, I'm learning and observing market. – Uchiha Madara May 17 '21 at 20:48
  • @UchihaMadara 6 months won't make bitcoin's "value proposition" any more real. – Grade 'Eh' Bacon May 18 '21 at 13:05

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