price time priority meaning

Price-time priority is the rule an exchange matching engine uses to decide which order gets filled first: the better price wins, and among orders sitting at the same price the one entered earliest wins. Nothing else counts — not the size of the order, not whether it came from an individual or an institution. The engine cannot see who placed an order, so a retail bid at ₹100.05 sits ahead of an institutional bid at ₹100.00.

orders on a stock exchange are matched on the basis of

Price first, then time — the price-time priority rule. The best-priced buy order is matched against the best-priced sell order, and where several orders share the same price they are filled in the sequence they arrived in the book. There is no discretion in the process and no preference given to large orders.

what is the tick size of shares on nse

The tick size is the smallest step a price can move in, and it is typically 5 paise for most equities on Indian exchanges. You cannot enter a bid at ₹247.63 when the tick is 5 paise, because every price must land on a multiple of that step. It also sets a floor on how narrow the bid-ask spread can ever get, which bites hardest in low-priced shares where one tick is a large percentage of the price.

why does a stock open at a price far away from the previous close

Because the opening price comes out of the pre-open auction rather than from continuous trading. Between 9:00 and 9:15 the exchange collects orders without matching them, then computes the single price at which the maximum quantity would trade, and that equilibrium price becomes the open. When news has accumulated overnight, that price can land well away from the previous close with no trades in between — the gap is the auction doing its job.

block deal meaning in share market

A block deal is a single large trade in a listed share, negotiated between two parties and executed in a separate exchange window rather than in the ordinary order book, subject to a minimum order value set by SEBI. A bulk deal is the related term for a trade of at least 0.5% of a company’s listed shares done in the normal market. Both must be reported to the exchange the same day with the counterparty named, which makes them a free public record of who has bought or sold in size.

How a price is actually formed

You know that an exchange matches buyers and sellers. This lesson goes one level deeper into the rules of that matching — because several of them explain behaviour that otherwise looks random or unfair.

Price-time priority

The matching rule is simple and absolute: better price wins; among equal prices, whoever queued first wins. There is no preference for size, no preference for institutions, and no discretion. A retail order at ₹100.05 is ahead of an institutional order at ₹100.00, always.

Tick size

Prices move in discrete steps — the tick size, typically 5 paise for most Indian equities. You cannot bid ₹247.63 if the tick is 5 paise. This sets a floor on how tight the bid-ask spread can ever be, which matters most in low-priced stocks where one tick is a meaningful percentage.

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The pre-open auction

1
9:00 to 9:08 — order collection
Orders can be placed, modified and cancelled. Nothing matches. The market is accumulating intentions rather than trading.
2
9:08 to 9:12 — price discovery
The exchange computes the single price at which the maximum quantity would trade. That equilibrium price becomes the open.
3
9:12 to 9:15 — buffer
A transition window before continuous trading begins.

Who else is in the book

Participant	What they are doing	Effect on you
Algorithms	A large share of Indian exchange volume is now algorithmic — arbitrage, market making, execution algorithms slicing large orders	Tighter spreads and better liquidity, most of the time. They are not trading against you personally.
Market makers	Continuously quote both sides and earn the spread	You can transact at all in less liquid instruments. Their absence is why some stocks have 2% spreads.
Arbitrageurs	Keep NSE and BSE prices aligned, and cash aligned with futures	Why the same share costs the same on both exchanges.
Block and bulk deals	Large trades, disclosed the same day with the counterparty named	Free, public information about who is actually buying in size.

Circuit filters

Individual stocks have daily price bands of 5%, 10% or 20%, and index-wide circuit breakers halt the entire market on extreme moves. Both exist to force a pause when prices move faster than information can be processed.

Simple bhasha mein

Machhli bazaar ka rate

Machhli bazaar mein rate koi board pe nahi likhta — jo bechne wala maang raha hai aur jo khareedne wala de raha hai, jahan dono mile wahi rate ban gaya. Stock ka bhaav bhi wahi hai: bid aur ask ka milna. Koi "sahi keemat" nahi hoti, sirf aakhri sauda hota hai.

What to remember

Matching is by price-time priority. The engine cannot see who you are.
Tick size sets a floor on how tight a spread can be.
The pre-open auction finds the price that maximises traded quantity — that is why opens gap.
Algorithms compete for short-term moves; they barely affect a months-long holding.
A lower circuit lock means you cannot sell at any price, not that you should not.

You reached the endMark it done and keep your streak going.

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Common questions

Short, direct answers to what people ask about this topic.

price time priority meaning: Price-time priority is the rule an exchange matching engine uses to decide which order gets filled first: the better price wins, and among orders sitting at the same price the one entered earliest wins. Nothing else counts — not the size of the order, not whether it came from an individual or an institution. The engine cannot see who placed an order, so a retail bid at ₹100.05 sits ahead of an institutional bid at ₹100.00.
orders on a stock exchange are matched on the basis of: Price first, then time — the price-time priority rule. The best-priced buy order is matched against the best-priced sell order, and where several orders share the same price they are filled in the sequence they arrived in the book. There is no discretion in the process and no preference given to large orders.
what is the tick size of shares on nse: The tick size is the smallest step a price can move in, and it is typically 5 paise for most equities on Indian exchanges. You cannot enter a bid at ₹247.63 when the tick is 5 paise, because every price must land on a multiple of that step. It also sets a floor on how narrow the bid-ask spread can ever get, which bites hardest in low-priced shares where one tick is a large percentage of the price.
why does a stock open at a price far away from the previous close: Because the opening price comes out of the pre-open auction rather than from continuous trading. Between 9:00 and 9:15 the exchange collects orders without matching them, then computes the single price at which the maximum quantity would trade, and that equilibrium price becomes the open. When news has accumulated overnight, that price can land well away from the previous close with no trades in between — the gap is the auction doing its job.
block deal meaning in share market: A block deal is a single large trade in a listed share, negotiated between two parties and executed in a separate exchange window rather than in the ordinary order book, subject to a minimum order value set by SEBI. A bulk deal is the related term for a trade of at least 0.5% of a company’s listed shares done in the normal market. Both must be reported to the exchange the same day with the counterparty named, which makes them a free public record of who has bought or sold in size.