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So what exactly moves the market again?

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Huntington WV
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iantg View Post
There are two sides to this.

1. The market order queue (buyers at ask, and sellers at bid)
2. The limit order queue (buyers at bid, sellers at ask)

The market moves up when the ask limit order queue is cleared
The market moves down when the bid limit order queue is cleared

The limit order queues can be cleared for 2 reasons:

1. Transactions occur do to market orders hitting it.
2. Cancels from orders inside the limit queue.

In your example the 101 market order buyers at ask and 100 market order sellers at bid would only play out the way you described if there were exactly 100 limit orders in both the bid and ask queue and no one canceled at all and every market order filled.

The more common case of a price level clearing is a combination of

1. Canceled from inside the limit order queue
2. Additions to a one of the limit orders queue
3. Market orders hitting the limit order queue

So in short market orders are only 1 of 3 factors that can influence if a price level changes.

Hope this helps.


This and the process of accumulation and distribution.

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