Which basic principles apply to on book matching?

In on book matching, the principle that orders are matched based on specific criteria is crucial to understanding the mechanics of trading. The correct option emphasizes a key characteristic of market orders in continuous trading.

In continuous trading, market orders are designed to be executed immediately at the best available price. However, special rules may indeed pertain to the execution of these orders to ensure that liquidity is available and that the market functions smoothly. For example, if market orders come in at the same price level but differ in priority, the execution might be managed to avoid excessive volatility or to provide a more stable trading environment. This highlights the importance of understanding how market orders operate differently from limit orders, which may have specific instructions regarding price.

This principle helps traders navigate market orders effectively, allowing them to anticipate execution in a fast-moving trading environment. The distinction between how market orders and other types of orders are handled in continuous trading formats is a fundamental aspect of trading strategy and execution.