The aim of this page is to introduce players to real world trading concepts and jargon which they will also encounter in the world of prosperity.

Exchange

A central marketplace where buyers and sellers meet to arrange trades in certain products. These products can be a wide range of things. Commodities, Stocks, Bonds, ETFs, Derivatives, Currencies, Cryptocurrencies. Modern exchanges are often heavily relying on digital infrastructure, and to a large extent match buyers and sellers using automated matching of BUY and SELL orders.

Order

An order is a binding message sent by a market participant to indicate a willingness to buy or sell a certain amount (e.g. 1 stock) of a specified product (e.g., NVIDIA) on an exchange (e.g., NASDAQ). There are essentially 3 types of orders:

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Market order An order to buy or sell immediately at the best available prices in the market.

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Limit order An order to buy or sell at a specified price or better (buy at that price or lower, sell at that price or higher).

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Stop order An order that becomes active only when the market price reaches a specified trigger level, after which it is typically sent as a market order.

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Some general properties of an order:

• Participant / Account (Owner): who sent the order.
  • This information is visible to the exchange, but typically not to other market participants.
• Product: the product the participant wants to trade.
• Quantity: how much of the product the participant wants to trade.
• Side: whether the order is a BUY or a SELL order.
  • The Side field could be skipped if quantity is allowed to be negative, e.g. quantity=1 for a BUY order, and quantity=-1 for a SELL order.
• Price: the price associated with the order.
  • This is required for limit orders. Market orders do not specify a price.
• Validity: how long the order remains active in the market.

Depending on the context, orders may have additional properties, but the ones above are the most fundamental. If a BUY order and a SELL order are compatible — meaning that a trade can be arranged where both the conditions of the SELL as well as the BUY order are met (e.g., price) — they are matched, and a trade is executed. (More about order matching below.)

In Prosperity, we focus on limit orders sent to Prosperity’s own exchange.

Bid Order

A bid order, is financial jargon for a BUY order. The price of such a bid order is typically referred to as the “bid” or the “bid price”. If traders refer to the “best bid”, they typically refer to the price corresponding to the highest active buy order for a certain product, which is the highest price another market participant can decide to sell the product at.

Ask Order / Offer