Matching Engines: How Trading Orders Are Paired
A matching engine is the software system a trading platform uses to process buy and sell orders and pair them according to established rules. Understanding price and time priority helps beginners learn the basic process from order submission to execution.
Role of the Matching Engine
A trader submits a buy or sell order to an exchange. The order usually includes the asset type, trading quantity, and desired price. The matching engine reads this information, searches a large set of orders for compatible buyers and sellers, and pairs them quickly. It is the core system a trading platform uses to process executions.
How Price and Time Determine Priority
Orders are matched primarily by price and time. The system first looks for buy and sell orders with compatible prices. When multiple orders have the same price, those submitted earlier receive priority. This ordering method is called price-time priority and establishes a clear and consistent execution sequence.
Functions Beyond Matching
A modern matching engine must process large volumes of orders quickly and accurately while helping maintain an orderly flow of buy and sell orders. It may also contribute to trading risk management and preserve records of trading activity for later queries and audits.
Original Tutorial
https://www.binance.com/zh-CN/academy/glossary/matching-engine
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