In a trading order-book, what do active buy and sell orders represent?
Understand the Problem
The question is asking about the meaning of active buy and sell orders in a trading order-book. It requires knowledge of financial markets and trading concepts to answer correctly.
Answer
Active buy orders are requests to purchase; active sell orders are offers to sell at set prices.
Active buy orders represent traders who wish to purchase a specific asset at a predetermined price, while active sell orders represent traders looking to sell a specific asset at a set price.
Answer for screen readers
Active buy orders represent traders who wish to purchase a specific asset at a predetermined price, while active sell orders represent traders looking to sell a specific asset at a set price.
More Information
In a trading platform's order book, buy and sell orders are displayed at different price levels, reflecting the intentions of investors and affecting market liquidity and price discovery.
Tips
A common mistake is assuming that a buy order is instantly filled once placed; however, it is only executed when a matching sell order meets the requested price.
Sources
- Example of an Order Book in action - skilling.com
- What Is an Order Book? Definition, How It Works, and Key Parts - investopedia.com
- Order Book Meaning | Ledger - ledger.com
