Matching Orders

AAA

DEFINITION of 'Matching Orders'

The process for executing securities trades by pairing buy orders with sell orders. Matching orders utilize algorithms which determine how orders are matched and in what order they are filled, which subsequently differ based on the venue to which the trade is routed. One common algorithm used in matching orders utilizes first in, first out (FIFO), which prioritizes assets acquired first to be filed for selling first.

INVESTOPEDIA EXPLAINS 'Matching Orders'

Today, most trade matching is done using powerful computers with millions of transactions completed each day. In the past, trading was done through an open outcry system, and execution was performed through a face to face interaction. Traders are concerned with order matching because they not want to miss profit opportunities due to slower than expected order executions.

RELATED TERMS
  1. Painting The Tape

    A form of market manipulation whereby market players attempt ...
  2. Volume

    The number of shares or contracts traded in a security or an ...
  3. Sell

    The process of liquidating an asset in exchange for cash. The ...
  4. Manipulation

    The act of artificially inflating or deflating the price of a ...
  5. Buy

    1. A recommendation to purchase a specific security. A buy rating ...
  6. First In, First Out - FIFO

    An asset-management and valuation method in which the assets ...
RELATED FAQS
  1. How does the risk of investing in the electronics sector compare to the broader market?

    The risk of investing in the electronics sector closely approximates the risk of investing in the broader market. The electronics ... Read Full Answer >>
  2. How do markets account for systematic risk?

    Systematic risks provide markets with an unpleasant quandary. Economists, policy makers, directors, fund managers and investors ... Read Full Answer >>
  3. What stage of the economic cycle is usually the best for an investor to enter the ...

    The best time during the economic cycle for an investor to enter the electronics sector is when he has confidently identified ... Read Full Answer >>
  4. How do S&P 500 futures work?

    S&P 500 futures are a type of capital asset contract that provides a buyer the right to a predetermined selection of ... Read Full Answer >>
  5. Can I use the current yield to compare a bond to an equity investment?

    Investors should be careful when comparing the current yield on a debt security with the growth of an equity security. Yield ... Read Full Answer >>
  6. What types of stocks have a large difference between bid and ask prices?

    The bid-ask spread is the difference between the highest offered purchase price and the lowest offered sales price for a ... Read Full Answer >>
Related Articles
  1. Economics

    Online Investment Scams Tutorial

    To bamboozle someone out of their money is an age-old ruse. Learn about some of the gimmicks modern-day swindlers use and avoid becoming a statistic.
  2. Active Trading Fundamentals

    The Basics Of Trading A Stock

    Taking control of your portfolio means knowing what orders to use when buying or selling stocks.
  3. Active Trading Fundamentals

    The Short And Distort: Stock Manipulation In A Bear Market

    High-quality stock reports needn't be confused with stock manipulators' dramatic claims.
  4. Investing Basics

    What's the Primary Market?

    The primary markets are where investors can get first crack at a new security issuance.
  5. Investing Basics

    What is the Coupon?

    In the financial world, “coupon” represents the interest rate on a bond.
  6. Investing Basics

    Explaining the Coupon Rate

    Coupon rate is the stated interest rate on a fixed income security.
  7. Investing Basics

    What is Cyclical Stock?

    A cyclical stock is an equity security whose price is affected by ups and downs in the overall economy.
  8. Investing Basics

    What are Ordinary Shares?

    Ordinary shares are any type of shares that are not preferred and don’t pay any type of predetermined dividend amount.
  9. Investing Basics

    Explaining the Spot Rate

    The spot rate is the immediate purchase price posted on exchanges for purchasing commodities, currency and securities.
  10. Investing Basics

    Understanding Redemption

    In the investing world, redemption refers to cashing out the value of bonds or mutual funds.

You May Also Like

Hot Definitions
  1. Expected Return

    The amount one would anticipate receiving on an investment that has various known or expected rates of return. For example, ...
  2. Carrying Value

    An accounting measure of value, where the value of an asset or a company is based on the figures in the company's balance ...
  3. Capital Account

    A national account that shows the net change in asset ownership for a nation. The capital account is the net result of public ...
  4. Brand Equity

    The value premium that a company realizes from a product with a recognizable name as compared to its generic equivalent. ...
  5. Adverse Selection

    1. The tendency of those in dangerous jobs or high risk lifestyles to get life insurance. 2. A situation where sellers have ...
Trading Center