Definition
Order matching determines which orders trade with each other, at what price, and for how much. In a continuous order book, an incoming order is compared with available opposite-side orders. A buy limit at 100 can match a sell offer at 100 or below, but not an offer above its limit.
How It Works
Many venues prioritize better prices and then earlier orders at the same price, although other allocation rules exist. An incoming order can match multiple resting orders, leaving a partial remainder if compatible quantity runs out. The execution price follows the venue’s rules rather than automatically being the midpoint of the two limits.
Key Considerations
Submitting or acknowledging an order does not mean it has matched. Available liquidity, limit constraints, time-in-force, and self-trade prevention can affect the result. Matching should also be distinguished from later settlement or external asset delivery. A trade can be recorded in an exchange account without an immediate blockchain transfer for each execution.