If one user made a buy and a sell order at the same time, would they be matched with each other or remain pending?
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Welcome to Bitcoin.SE. I edited your question to make it a bit clearer and added more tags. I’ve also removed your additional questions, because only one topic should be asked about in each question. You can find an answer to your other questions here: How do bitcoin exchanges set prices?– Murch ♦Dec 21, 2015 at 14:28
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3 Answers
On "real" exchanges Trading Against Yourself or Wash Trades are usually forbidden. Either by a real time check when you enter the second order or after the fact with fines by the oversight agency.
As Bitcoin Exchanges are not regulated, it's their choice to either block you from doing it or not (earning fees for the exchange).
The spread is pretty wide, so it will probably cost you quite a bit of money to do this on a meaningful scale.
Depends on which exchange you use. Those are all internal policies not used by the Bitcoin network.
The proposed scenario doesn’t make sense to me. If you would make a buy and sell order as market orders at the same time, you would lose money. If they were matched with each other, you’d buy from yourself, paying what you earn and losing the trade fee. If they were not matched with each other, your buy order would be the best for the moment, and your sell order would be matched with a lower buy order afterwards (or vice versa).
So, if you’d have a buy and sell order open as limit orders at the same time, you’d open them at a spread: e.g. buy for $5 and sell for $6. Those two orders would be unmatchable though. For them to be matchable, you’d have to open them at e.g. buy for $6 and sell for $5. Then you’d lose money on every trade though, and that would be stupid.
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One example of a case where you would want to make buy and sell orders that match is if you benefit from the market being liquid. In this case, you don't want your offers to match each other, you want them both to stay on the books so that liquidity is improved. (Another example is if you want to peg an asset at a specific price relative to another asset.) Dec 28, 2015 at 11:19