<p>Currency exchanges are implemented through programs called <a href="http://en.wikipedia.org/wiki/Order_book_%28trading%29">order-matching engines</a>. When a new order is entered, a buy order for example, the matching engine checks to see if there is a match on the other side, a sell order at the right price.</p>

<p>Bid is the price a user is willing to pay and Ask is the price at which a seller is willing to sell. The difference between the two is called the spread. Most exchanges try to minimize the spread. The price often quoted is midway between the highest bid and the lowest ask.</p>

<p>Here are some examples of matching engines: <a href="https://github.com/jordanbaucke/Limit-Order-Book">https://github.com/jordanbaucke/Limit-Order-Book</a></p>

CC BY-SA 3.0
2013-08-15T15:31:42.677Z
@KinnardHockenhull, what happens when someone wants to buy at 101 and someone wants to sell at 100? Does the trade get executed at 101 or 102 then?
Pacerier
CC BY-SA 3.0
2013-08-16T11:45:20.410Z
Much of this depends on the market. Different markets have different rules about execution. Some bitcoin markets have been accused of executing the sell at 101 and the buy at 102 and keeping the spread. Most people coming from traditional finance would find that outrageous.
Kinnard Hockenhull
CC BY-SA 3.0
2013-11-29T19:52:26.863Z
@Pacerier Having two offers, one with 100 and the other with 101 where did you get 102 from?
Piotr Dobrogost
CC BY-SA 3.0
2013-11-30T03:54:46.813Z
@PiotrDobrogost, what I meant was 100 vs 101
Pacerier
CC BY-SA 3.0
2013-11-30T03:55:18.037Z
@KinnardHockenhull, So exactly *which* exchange daringly do something like that!?
Pacerier
CC BY-SA 3.0
2013-01-03T08:51:41.920Z
What are some of the common ways to manipulate the market ??
BitCoin New Guy
CC BY-SA 3.0
2013-01-03T09:02:05.780Z
Actually the "price often quoted" is the "last transaction" price.
o0'.
CC BY-SA 3.0
2013-01-03T09:37:33.393Z
SO people can do trades of .0001 BTC with a lower ask price to keep the SPOT price down ? There is a BOT doing that on BTC-e for BTC & LTC
BitCoin New Guy
CC BY-SA 3.0
2013-01-03T16:16:12.483Z
Interesting, are you sure its a bot? What are there transaction fees?
Kinnard Hockenhull
CC BY-SA 3.0
2013-01-03T21:01:48.250Z
.5% ...It keeps doing .001 BTC for a sell price straight after lats trade & at a lower price hmmm
BitCoin New Guy
CC BY-SA 3.0
2013-01-03T05:06:44.873Z
2013-01-03T05:06:44.873Z
Kinnard Hockenhull
<p>Pardon my Ignorance but can somebody explain the basics </p>

<p>Of how trading (Bid Buy/Bid Sell) works of the common exchanges </p>

<p>www.mtgox.com
www.btc-e.com</p>

<p>Aslo some of the common ways people or conditions suppress or raise the price of LTC &amp; BTC</p>

<p>Thanks In Advance</p>

<exchanges><trading><weaknesses><buy-bitcoins><marketplace>
How Does trading on the Exchanges Work?
BitCoin New Guy
# How Does trading on the Exchanges Work?

(Asked by: username_0 on 2013-01-03)

Pardon my Ignorance but can somebody explain the basics

Of how trading (Bid Buy/Bid Sell) works of the common exchanges

www.mtgox.com
www.btc-e.com

Aslo some of the common ways people or conditions suppress or raise the price of LTC & BTC

Thanks In Advance

**Tags:** exchanges, trading, weaknesses, buy-bitcoins, marketplace


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## 1 answers

### Answer by username_1 on 2013-01-03. Score: 5 | Accepted answer

Currency exchanges are implemented through programs called [order-matching engines](http://en.wikipedia.org/wiki/Order_book_%28trading%29). When a new order is entered, a buy order for example, the matching engine checks to see if there is a match on the other side, a sell order at the right price.

Bid is the price a user is willing to pay and Ask is the price at which a seller is willing to sell. The difference between the two is called the spread. Most exchanges try to minimize the spread. The price often quoted is midway between the highest bid and the lowest ask.

Here are some examples of matching engines: <https://github.com/jordanbaucke/Limit-Order-Book>

> **Comments:**
> **username_0**: What are some of the common ways to manipulate the market ??  
> **username_4**: Actually the "price often quoted" is the "last transaction" price.  
> **username_0**: SO people can do trades of .0001 BTC with a lower ask price to keep the SPOT price down ? There is a BOT doing that on BTC-e for BTC & LTC  
> **username_1**: Interesting, are you sure its a bot? What are there transaction fees?  
> **username_0**: .5% ...It keeps doing .001 BTC for a sell price straight after lats trade & at a lower price hmmm  
> **username_2**: @username_1, what happens when someone wants to buy at 101 and someone wants to sell at 100? Does the trade get executed at 101 or 102 then?  
> **username_1**: Much of this depends on the market. Different markets have different rules about execution. Some username_0 markets have been accused of executing the sell at 101 and the buy at 102 and keeping the spread. Most people coming from traditional finance would find that outrageous.  
> **username_3**: @username_2 Having two offers, one with 100 and the other with 101 where did you get 102 from?  
> **username_2**: @username_3, what I meant was 100 vs 101  
> **username_2**: @username_1, So exactly *which* exchange daringly do something like that!?  

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