Matching Engine Algorithms

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Two types of Matching Algorithms:

FIFO (First In First Out) algorithm:

In this Algorithm, the order which is received first takes priority over the other orders.

Pro-Rata Matching:

In this Algorithm, the priority is given to the highest-priced buy order and the orders are also partially filled in this algorithm to motivates other orders to join the queue with large limit orders.

References used:

1. https://corporatefinanceinstitute.com/resources/knowledge/trading-investing/matching-orders/
2. https://www.investopedia.com/terms/m/matchingorders.asp