Limit vs market orders.

Hello everyone in today’s video I will be talking about the difference of a regular Dom and one which can show you “insight prints” (market orders) and why this is important.

I will also be going over the difference between limit and market orders. Because in order to understand how to market moves you need to be aware how these orders interact with each other.

So basically, the limit orders or orders that are already sitting in the book and waiting to get filled. Everyone who is Trading can you see the resting limit orders on the book. But it doesn’t necessarily mean that those orders actually get traded. Because the person who put the order in to the book, could pull it at any time if you want to or on the other hand, I had more orders to the book once price gets there.

Market orders on the other hand are orders that are actually traded. They will show up on the inside of your DOM. If you don’t have a good DOM they also show up on a footprint chart. If you execute a market order you will fill the closest limit order sitting on the book on the other side. Therefore, you will always pay the spread and get filled at a worse price than if you would limit buy or sell. But it also has an advantage because you do get filled immediately. With a limit order on the other hand you would need to wait for a market order to hit into you.

So the volatility of a market always depends on how many limit orders are resting and sitting in the book in correlation to how many market orders are hitting.