Will I pay BID price or lowest necessary amount?

4

3

I was wondering about how ASKs and BIDs are matched:

Say I set up two separate trading accounts on mtgox.

On my first account, I offer to sell 1 BTC for 1000 USD

...Nobody will buy it (at current rates) so a sell will not happen.

Now, on my second account I offer to buy 1 BTC at 1000 USD.

I guess everyone will take that offer, and the buy will happen.

But will I get the 1000 USD that my first account is willing to pay (being the highest match), or what will happen?

I have a feeling this is a 'stupid' question, but I have no experience in how trading systems work.

mikkelbreum

Posted 2013-04-16T08:24:12.733

Reputation: 143

2Under the traditional order book model, an offer to buy 1 BTC at 1000 USD is an offer to pay up to 1000 USD to buy 1 BTC. – David Schwartz – 2013-04-16T09:39:15.933

Answers

5

First account gets nothing.

Second account buys them starting from the lowest offer, going up.

Such as, there are sells:

  • 0.30 units @ a price of 100
  • 0.10 @ 150
  • 0.40 @ 650
  • 0.80 @ 850
  • 1.00 @ 1000 (your first offer)

You post a limit order to buy 1.00 unit @ a maximum price of 1000, you get:

  • 0.30 @ 100 (total spent 30)
  • 0.10 @ 150 (total 45)
  • 0.40 @ 650 (total 305)
  • 0.20 @ 850 (total 475)

You got the amount requested (1.00 units), spending 475 instead of 1000 (the maximum you were willing to spend).

The new market depth will be:

  • 0.60 @ 850
  • 1.00 @ 1000 (your first offer)

o0'.

Posted 2013-04-16T08:24:12.733

Reputation: 5 220

THis doesn't match the example in the question which was buying 1.0 unit at $1000 not 1000 units. – dchapes – 2013-04-16T08:55:01.220

So though my second account wants to buy only 1 BTC, it will end up buying 6.6 spending all 1000USD, rather than getting 1BTC at the lowest possible price (100 USD)? – mikkelbreum – 2013-04-16T08:59:32.300

2Fixed, sorry for the mess – o0'. – 2013-04-16T09:36:17.937