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So I am doing digital assets trading. Which is very interesting way to make some money (and at the very least cover the inflation rate). The trading itself with all different options is quite clear. However I struggle to understand how exactly market price is calculated.

To elaborate - below is the screenshot of a buy/sell orders on one of the markets. You can clearly see that the lowest asking price is 226.950 (EUR), where as the highest bid is 226.430 (EUR). However the calculated market price is always somewhere in between of that (in this case it is 226.440 EUR).

My question is how is the market price determined based on highest bid and lowest ask? Is there any universal algorithm to that? Or is it up to market (software in this case) to decide how to calculate this?

enter image description here

Alexey Kamenskiy
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1 Answers1

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Market price simply depends on your order side. If you are placing a buy order the market price is the lowest ask, if you are placing a sell order the market price is the highest bid. If your order is larger than the volume then you'd need to also consider the next lowest ask or next highest bid until you've fulfilled your order volume.

quid
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