Trading exchanges consist of the following important components:
- Orderbook: A platform where a central authority posts buy and sell offers for different assets from all the traders that are interacting with the exchange. These assets can be anything ranging from shares of a company to currencies such as US dollars and UK pounds, to commodities such as gold, silver, crude oil, and so on. The orderbook is visible to all trade participants in real time, and it updates as new offers are submitted, or trades are carried out. To buy or sell an asset, the trader simply needs to look at the current price and then submit a new offer. If there is a matching offer, a trade is carried out.
- Matching engine: The ...