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Author Topic: How are orders executed on mtgox and other exchanges?  (Read 643 times)
bitboy999
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July 03, 2011, 10:18:55 PM
 #1

Hi,

I'm new to trading bitcoins, and trying to work out some kind of a strategy, similar to trading shares...

I would like to set up a few "buy" orders on different exchanges (mtgox, bitomat), which would not execute right away, but when there is a suitable sell offer.
So I would offer to pay a bit less than the best sell offer is asking for, counting on the price to fall.

I have a few questions regarding this:

1. If I set up an offer e.g. "I'll buy 2BTC for at most $9/BTC", and at some point an offer appears: "sell 1BTC for $9/BTC", will my "buy" offer be executed partially or not at all? What if a "sell 1BTC for $8.9/BTC" comes in?
2. How does the exchange decide, which buy offer to match with a given sell offer? Is it oldest first? E.g. say there are 10 offer "buy for $9/BTC", and one sell offer comes in. Which of the buy offers will be fulfilled?

If anybody can cast any light on the questions above, I'd be grateful.

Thanks,
Bitboy999
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July 04, 2011, 01:07:27 AM
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1. If I set up an offer e.g. "I'll buy 2BTC for at most $9/BTC", and at some point an offer appears: "sell 1BTC for $9/BTC", will my "buy" offer be executed partially or not at all? What if a "sell 1BTC for $8.9/BTC" comes in
I can only speak about Mt. Gox, but yes, you would buy 1BTC and have an open order 1BTC left.
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2. How does the exchange decide, which buy offer to match with a given sell offer? Is it oldest first? E.g. say there are 10 offer "buy for $9/BTC", and one sell offer comes in. Which of the buy offers will be fulfilled?
If you try to buy at $9/BTC then it would buy the cheapest orders first, and buy as many as possible until there were no more at $9/BTC or lower.

So if there was one person selling for $8/BTC for a single bitcoin, and another for $9/BTC for a single bitcoin, and you had an open order to buy 2 Bitcoins, you would buy the $8 and $9 dollar bitcoins, and you would have spent $17 (less than you were offering, which is good for you).

Just to add, I doubt you will be able to buy for $9/BTC ever again, but good luck.
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