Zaraba method


DEFINITION of 'Zaraba method'

A method of matching orders that involves using an auction-like process to trade securities. The orders are organized by both their prices and the time that they were taken. As soon as an order for a security is delivered, it is compared and matched with orders already in the order book. When a bid comes in that matches the price requested by another order, the two orders are executed and taken out of the order book.

BREAKING DOWN 'Zaraba method'

The zaraba method is most often associated with the Japanese stock exchanges. Typically, the zaraba method is used during normal trading sessions, whereas a different order matching method, which is called the itayose method, is used to determine the opening and closing prices for each morning and afternoon trading session.

  1. Depth of Market (DOM)

    A measure of the number of open buy and sell orders for a security ...
  2. Opening Price

    The price at which a security first trades upon the opening of ...
  3. Auction Market

    A market in which buyers enter competitive bids and sellers enter ...
  4. Itayose

    A clearing method used by Japanese commodity exchanges to set ...
  5. Closing Price

    The final price at which a security is traded on a given trading ...
  6. Bidding Ring

    A group of individuals or businesses that conspire to affect ...
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