An Order-Book Market is a type of financial market structure where buy and sell orders for a specific asset, like a cryptocurrency, are collected and displayed in a central registry, known as an order book. This system provides transparency regarding market depth and price discovery.
Mechanism
Participants submit limit orders specifying a price and quantity they are willing to trade. These orders are then arranged by price (best bids highest, best asks lowest) and time of submission. Incoming market orders are executed against the best available limit orders, leading to price matching and transaction settlement.
Methodology
The core principle is continuous double auction, where buyers and sellers simultaneously submit their desired prices and quantities. This structure facilitates efficient price formation, provides clear visibility of liquidity, and enables algorithmic trading strategies that rely on granular order book data for execution and market making, forming a fundamental component of many centralized and decentralized crypto exchanges.
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