Order Driven Market

AAA

DEFINITION of 'Order Driven Market'

A financial market where all buyers and sellers display the prices at which they wish to buy or sell a particular security, as well as the amounts of the security desired to be bought or sold. This is the opposite of a quote driven market, which is one that only displays bids and asks of designated market makers and specialists for a specific security.

INVESTOPEDIA EXPLAINS 'Order Driven Market'

The biggest advantage of an order driven market is transparency, since the entire order book is displayed for investors who wish to access this information. Most exchanges charge fees for such information. On the other hand, an order driven market may not have the same degree of liquidity as a quote driven market, since the specialists and market makers in the latter have to transact business at their posted bid and ask prices.

RELATED TERMS
  1. Ask

    The price a seller is willing to accept for a security, also ...
  2. Auction Market

    A market in which buyers enter competitive bids and sellers enter ...
  3. Quote Driven Market

    An electronic stock exchange system in which prices are determined ...
  4. Bid

    1. An offer made by an investor, a trader or a dealer to buy ...
  5. Fractal Markets Hypothesis (FMH)

    An alternative investment theory to Efficient Market Hypothesis ...
  6. Spot Rate

    The price that is quoted for immediate settlement on a commodity, ...
Related Articles
  1. Investing Basics

    Understanding Order Execution

    Find out the various ways in which a broker can fill an order, which can affect costs.
  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. Technical Indicators

    Using Moving Averages To Trade The Volatility Index (VIX)

    VIX moving averages smooth out the natural choppiness of the indicator, letting traders and market timers access reliable sentiment and volatility data.
  4. Technical Indicators

    Detrended Price Oscillator Trading Strategies

    The detrended price oscillator (DPO) offers a simple approach to cycle analysis, removing momentum and long-term trends from the equation.
  5. Charts & Patterns

    Avoid The Perfection Trap In Trading

    Avoid the perfection trap and make peace with the market’s high levels of systematic noise.
  6. Fundamental Analysis

    Spectator Vs. Speculator: Two Market Approaches

    Spectators and speculators rely on different mechanisms to identify and profit from market opportunities.
  7. Trading Strategies

    Best Ways To Find Profitable Intraday Trades

    This checklist can uncover patterns and setups that generate profitable short-term trading opportunities.
  8. Trading Strategies

    Understanding The Price Vs. Time Equation

    Price and time generate vastly different reward: risk profiles.
  9. Active Trading Fundamentals

    How To Avoid The 5 Most Dangerous Market Scenarios

    Recognizing the five most dangerous market scenarios can save a fortune in avoidable losses, setting the stage for long term success.
  10. Options & Futures

    The Basics Of Trading S&P 500 Price Progression

    The S&P 500 index futures contract works exceptionally well as a road map for short-term market timing and direction.
RELATED FAQS
  1. What is the difference between a quote driven market and an order driven one?

    The difference between these two market systems lies in what is displayed in the market in terms of orders and bid and ask ... Read Full Answer >>
  2. How do you calculate a reverse split using Excel?

    A reverse stock split is a corporate action a company may take to meet exchange requirements. A reverse split reduces the ... Read Full Answer >>
  3. How do I decide whether a credit card offer is a good deal or not?

    Externalities lead to market failure because the price equilibrium does not accurately reflect the true costs and benefits ... Read Full Answer >>
  4. How is the short interest of a company related to a short squeeze of a company?

    The short interest is a predictor of whether a company is a short squeeze candidate. Generally, when there is a large fluctuation ... Read Full Answer >>
  5. What are some common markets where notional value is used?

    Notional value is commonly used in futures and swap markets. The notional value is the total net amount of derivative contracts, ... Read Full Answer >>
  6. What is the difference between a forward rate and a spot rate?

    The forward rate and spot rate are different prices, or quotes, for different contracts. The forward rate is the settlement ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Tiger Cub Economies

    The four Southeast Asian economies of Indonesia, Malaysia, the Philippines and Thailand. Tiger cub economy indicates that ...
  2. Gorilla

    A company that dominates an industry without having a complete monopoly. A gorilla firm has large control of the pricing ...
  3. Elephants

    Slang for large institutions that have the funds to make high volumes trades. Due to the large volumes of stock that elephants ...
  4. Widow's Exemption

    In general terms, a widow's exemption refers to the amount that can be deducted from taxable income by a widow, thereby reducing ...
  5. Wedding Warrant

    A warrant that can only be exercised if the host asset, typically a bond or preferred stock, is surrendered. Until the call ...
  6. Marlboro Friday

    A reference to Friday, April 2, 1993, when Philip Morris, the maker of Marlboro cigarettes, announced that it would be cutting ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!