<p>This is exactly how a normal stock exchange works.</p>

<p><em>The quoted rate and the <strong>Buy</strong> and <strong>Ask</strong> prices are just driven by the supply and demand of people wanting to trade on that exchange.</em></p>

<p>BTC-e operates an order book. Sellers add <strong>Sell</strong> orders with an <strong>Ask</strong> price which they are happy to sell at (This is called a <strong>Limit</strong> order)
Buyers places Buy orders with a <strong>buy</strong> (or <strong>bid</strong>) price they are willing to pay.</p>

<p>The difference between the two prices is called a <strong>spread</strong>.</p>

<p>So if you place a <strong>Limit Buy</strong> order, but it is below the lowest <strong>Sell</strong> order then your order gets placed in the order book. If it was higher than the highest order, already in the order book, then the quoted <strong>Bid</strong> price will increase to the price you <strong>Bid</strong> at. Now if later someone else places a sell order at or below your bid price, then the order book will match your order and it will become a trade. (and vice versa).</p>

<p>When this happens. your orders are taken off the order book* and the next lower <strong>Buy</strong> order and next higher <strong>Sell</strong> order will become the new <strong>Bid</strong> and <strong>Ask</strong> prices.</p>

<p>Now if you want to make a <strong>Buy</strong> (or <strong>Sell</strong>) <strong>Trade</strong> right now: 
You can place a <strong>Market</strong> order which you say you want to <strong>Buy</strong> (or <strong>Sell</strong>) X number of coins (or shares on a stock market) i.e., you don't give a price.
When you do that, the BTC-e order book software will match the lowest sell limit order (or highest buy order when you are selling) and create a trade right away.</p>

<p>Which is the right order type to place, that depend on your trading strategy and is a whole other topic.</p>

<p>The rate quoted is normally the last price that a pair of orders that was matched at.</p>

<p>*It is slightly more complex than that, because you have partial fills, but you get the idea.</p>

CC BY-SA 3.0
2013-12-17T05:45:45.323Z
So the rate or price is the last trade?  It seems that sometime the price matches the lowest Ask and/or the highest bid.  Is this skewed because of partial fills?
user6972
CC BY-SA 3.0
2013-12-18T04:24:47.027Z
Yes partial fills (or another Buy/Ask order at that price) or someone later adds an order at that last price (but there is still a spread to the other side of the trade)
DarcyThomas
CC BY-SA 3.0
2013-12-18T04:28:43.390Z
FYI a fill is Your one order completes as several matching trades. As people wanting to buy sell exactly the same amount at a matching price is rather rare.
DarcyThomas
CC BY-SA 3.0
2013-12-16T22:10:40.907Z
2013-12-16T22:35:51.120Z
2013-12-16T22:35:51.120Z
DarcyThomas
<p>Can you explain me in detail, what affect the price on BTC-e ? I understand the mechanic, like if there is strong demand and limited supply the price goes up. But how does it work on BTC-e? Because to me it looks like the website is setting the price itself. There are lowest and highest ask prices.</p>

<p>Thanks</p>

<exchanges><exchange-rate><btce>
BTC/USD price on BTC-e
user3024792
# BTC/USD price on BTC-e

(Asked by: username_0 on 2013-12-16)

Can you explain me in detail, what affect the price on BTC-e ? I understand the mechanic, like if there is strong demand and limited supply the price goes up. But how does it work on BTC-e? Because to me it looks like the website is setting the price itself. There are lowest and highest ask prices.

Thanks

**Tags:** exchanges, exchange-rate, btce


---

## 1 answers

### Answer by username_1 on 2013-12-16. Score: 4

This is exactly how a normal stock exchange works.

*The quoted rate and the **Buy** and **Ask** prices are just driven by the supply and demand of people wanting to trade on that exchange.*

BTC-e operates an order book. Sellers add **Sell** orders with an **Ask** price which they are happy to sell at (This is called a **Limit** order)
Buyers places Buy orders with a **buy** (or **bid**) price they are willing to pay.

The difference between the two prices is called a **spread**.

So if you place a **Limit Buy** order, but it is below the lowest **Sell** order then your order gets placed in the order book. If it was higher than the highest order, already in the order book, then the quoted **Bid** price will increase to the price you **Bid** at. Now if later someone else places a sell order at or below your bid price, then the order book will match your order and it will become a trade. (and vice versa).

When this happens. your orders are taken off the order book\* and the next lower **Buy** order and next higher **Sell** order will become the new **Bid** and **Ask** prices.

Now if you want to make a **Buy** (or **Sell**) **Trade** right now:
You can place a **Market** order which you say you want to **Buy** (or **Sell**) X number of coins (or shares on a stock market) i.e., you don't give a price.
When you do that, the BTC-e order book software will match the lowest sell limit order (or highest buy order when you are selling) and create a trade right away.

Which is the right order type to place, that depend on your trading strategy and is a whole other topic.

The rate quoted is normally the last price that a pair of orders that was matched at.

\*It is slightly more complex than that, because you have partial fills, but you get the idea.

> **Comments:**
> **username_2**: So the rate or price is the last trade?  It seems that sometime the price matches the lowest Ask and/or the highest bid.  Is this skewed because of partial fills?  
> **username_1**: Yes partial fills (or another Buy/Ask order at that price) or someone later adds an order at that last price (but there is still a spread to the other side of the trade)  
> **username_1**: FYI a fill is Your one order completes as several matching trades. As people wanting to buy sell exactly the same amount at a matching price is rather rare.  

---

