FM SESSION 10

Order-driven market

a market where prices are determined by supply and demand through buy and sell orders between investors (examples: Euronext, Nasdaq)

Quote-driven market

a market where prices are set by market makers who continuously provide bid and ask quotes (examples: Forex, bond markets, OTC markets)

Order book

a list of all buy and sell orders showing prices and quantities available in the market

Bid price

the highest price a buyer is willing to pay for an asset

Ask price

the lowest price a seller is willing to accept for an asset

Bid-ask spread

the difference between the bid price and the ask price

Market maker

a financial intermediary that continuously provides buy and sell prices and ensures liquidity

Liquidity

the ability to quickly buy or sell an asset without significantly affecting its price

Market order

an order to buy or sell immediately at the best available price

Limit order

an order to buy or sell at a specific price or better

Stop market order

an order that becomes a market order when a trigger price is reached

Stop limit order

an order that becomes a limit order when a trigger price is reached

Price-time priority

rule where orders are executed first by best price, then by earliest time

Best bid

the highest price currently offered by buyers

Best ask

the lowest price currently offered by sellers

Euronext

a European stock exchange that operates as an order-driven market where orders are matched using price-time priority