What happens when I buy too expensive or sell too cheap

[zhangweiwu]

Hello. I never dealt in any other exchange market before bitcoin, so this may be stupid.

What happens if I buy too expensive, or sell too cheap, than the average? Of course the deal will be successful immediately, but at which price?

Supporse there are 4 people each buying a bitcoin, at the following prices:

$105
$103
$102
$100
[ there are no more bids at lower prices]

Now I decide to sell a bitcoin at $90 - maybe I am crazy, may be it is a typo, maybe the market is plummeting at 1$ per minute - and I fill the form, state I am willing to sell a bitcoin at $90, what will happen?

The deal will be successful, but would I get $90 (my biding) or $100 (others' bidding)? Or would I get $95? What about the buyer, would he suddenly find he bought bitcoin cheaper than the price he is willing to pay? Or did the market operator benifits from the difference? Or did each exchange market make their own rule?

I think this happens in stock market too. It's not a new situation.

[Foxpup]

You will get $105. When you place sell order for lower than the highest bid, it's filled by that bid immediately, and then the next highest bid if that's not enough (eg, if you were selling 2 bitcoins, you would get $105 + $103), and so on until your order is completely filled or there are no more bids above your price. Same thing if you place a buy order for higher than the lowest ask: the order is filled at the lower price. They're called "limit orders" for a reason: when you place a sell limit order for $90, that does not mean "sell at $90", it means "don't sell for less than $90". If you can get a better price, you will.

This also means that those who placed the outstanding orders don't get the best deal that they potentially could have. If a limit order isn't filled immediately, there's always the risk that someone else comes along later with a better offer and basically screws you over (though if the guy who bid $105 wasn't willing to buy at that price, he shouldn't have placed the order in the first place).

All other markets work the same way.

[zhangweiwu]

Thanks. That is very clear!

[vane91]

Yes, unless there are many people in front of you that sold just before you press sell, and you didn't see them because it happened too fast or there's lag...
be carefull.

[cryptocoinhunter]

Good to know. Thanks for the info.