The order book and liquidity

Before a trade is executed, orders wait in the order book, displayed vertically in a window called the DOM (depth of market). In it, prices are arranged: above the current price the resting sell orders line up (the offers), and below it the resting buy orders line up (the bids), and beside each price a quantity waits to be executed.

Market order and limit order

• The limit order — sits in the book at a price its owner chooses and waits for the market to come to it. This order adds liquidity, and its owner is a passive participant.
• The market order — is executed immediately at the best available price, swallowing the existing limit orders. This order consumes liquidity and moves the price, and its owner is an aggressive participant.