Market Structure · Trading venues
Market structure: who's on the other side of your trade
Order books, bid/ask, market makers, exchanges vs off-exchange, and the trade lifecycle from click to settlement, which is where your trade breaks come from.
Step 1 of 7 · 1. The order book30 min read ·
1. The order book
Every listed stock has a limit order book: resting buy orders (bids) and sell orders (asks). The highest bid and lowest ask are the top of book; the gap is the spread.
| Bids (buyers) | Price | Asks (sellers) |
|---|---|---|
| 100.03 | 500 | |
| 100.02 | 200 ← best ask | |
| 300 ← best bid | 100.00 | |
| 800 | 99.99 |
A market order takes liquidity (crosses the spread, fills now, price not guaranteed). A limit order makes liquidity (rests on the book at your price, fill not guaranteed).
Next: 2. Who provides liquidity