Question about order of trade execution
Here’s a summary of the main problem and solutions discussed in the user’s post:
- Main Problem: The user is seeking clarification on how limit orders are executed when there are multiple orders at the same price in a lightly traded security.
- Solution: Limit orders are filled based on the order they are received, with market orders prioritized over limit orders.
- Additional Information: There is no guarantee that all limit orders at a specific price will be filled, as orders must remain at or better than the limit price while other orders are filled first.
- Further Guidance: The execution of limit orders can vary by market center (e.g., NASDAQ vs. NYSE), and users can check the specific rules on the exchanges’ websites.
This information helps users understand the execution process for limit orders in trading.
Here’s the full thread
In what order are limit orders executed when there are multiple limit orders at the same price in a lightly traded security?
Great question, @JayG!
Orders are filled in the order they are received, with market orders being filled first and then limit orders. With limit orders, there can be no assurance that all orders at a particular price limit will be filled when that price is reached. When your limit price for the order is met, the price must remain at your limit (or better) long enough for orders ahead of yours to be filled first. Such orders are also subject to the existence of a market for that security.
You can learn more about limit orders on our FAQ page here.
Trading FAQS: Order Types: https://www.fidelity.com/trading/faqs-order-types
Additionally, limit orders at each price level are filled in a sequence that is determined by the rules of the various market centers, and they do vary. For example, the NASDAQ and NYSE can have different execution methods. You can typically review an exchange’s own rules for limit orders on their website.
Let us know if any other questions come up! 🟢