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?
