Placing buy and sell orders in ASX CFDs

 

Orders placed in the ASX CFD market are matched on a strict time-price priority.  This means orders that are matched (executed) will be executed at the price level of the order placed first. An understanding of how orders are matched will enable you to better place orders and improve the fills you receive.

Implications for traders in the market

For buyers

If you place a buy order at a price level above the price of the underlying, prior to the open or in the absence of any other sell order in the market, your order will be filled at the bid price, in the instance that a sell order is placed into the market at the price below the price of your bid.

For sellers

If you place a sell order at a price level below the price of the underlying, prior to the open or in the absence of any other buy order in the market, your order will be filled at the offered price, in the instance that a buy order is placed into the market at the price above the price of your offer.

This is perhaps best demonstrated by way of several examples.

Example 1

Imagine the following buy and sell orders are entered in ASX Trade24 prior to the 10:00 AM open:

 

Time Order
9:00 AM Sell 100 lots @ $14.00
9:15 AM Buy 100 lots @ $15.00
9:30 AM Sell 100 lots @ $15.00
9:45 AM Buy 100 lots @ $14.00

Pre-open the order book would look like this:

 

Orders Trades
Price Buy Sell Price Volume Time
$16.00     
$15.00 100 lots  100 lots
$14.00 100 lots 100 lots
$13.00 

Because the sell order at $14.00 was placed in advance of the buy order at $15.00, once the market opens these orders would be matched at $14.00 resulting in a trade for 100 lots at $14.00.

The order book now looks like this:

 

Orders Trades
Price Buy Sell Price Volume Time
$16.00      $14.00 100 10:00 AM
$15.00 100 lots
$14.00 100 lots
$13.00 

Example 2

In this example the same orders are entered but in a different time order. Note that the buy order at $15.00 has been placed in advance of the sell order at $14.00.

 

Time Order
9:00 AM Buy 100 lots @ $15.00
9:15 AM Sell 100 lots @ $14.00
9:30 AM Sell 100 lots @ $15.00
9:45 AM Buy 100 lots @ $14.00

Pre-open the order book would look like this:

 

Orders Trades
Price Buy Sell Price Volume Time
$16.00     
$15.00 100 lots  100 lots
$14.00 100 lots 100 lots
$13.00 

Because the buy order at $15.00 was placed in advance of the sell order at $14.00, once the market opens these orders would be matched at $15.00 resulting in a trade for 100 lots at $15.00.

The order book now looks like this:

 

Orders Trades
Price Buy Sell Price Volume Time
$16.00      $15.00 100 10:00 AM
$15.00 100 lots
$14.00 100 lots
$13.00