This workout asks us to calculate the average price that will result from the given limit order. We are presented with the existing order book as it stands at the moment with the two left columns of the table being for the buy, size and price respectively. And for the right-hand side, the sell orders that are yet unmatched for price and size. In terms of the details of the limit order, the direction is that it's a sell trade. So the trade is looking to sell 5,000 shares at a price of $109 or better. In terms of calculating the average trade price, we have a sell order coming in, which will be matched off against the existing buy orders at the best prices available for this sell order. So the sell order wants to sell at 109 but we can do better than that because there is an existing buy order where this particular counterparty wants to buy 2,000 shares at $112 a share. So we can match that trade, buy those shares at $112 but there's only 2,000 of them. Okay, so that can be purchased for sure. The next trade down on the buy side is at 110. Well, this is still better than the desired limit price on our limit order. So we can trade at $110 per share for the 1,000 shares of that particular trade. So far, 3,000 of our limit order for 5,000 shares has been matched but there remains 2,000 that has yet to be matched.

So let's keep going down the buy side. The next buy order on the order book is at 109, which does still match with the sell order limit price of 109. So we can match at that particular price but we only need to trade the volume that remains on our sell limit order. So we need to look at the difference between the sell order size of 5,000 and what has been matched so far, which is 3,000. So there's 2,000 gonna come out of that calculation, which is gonna be matched at the price on the third buy order. The formula so far calculates the total revenue generated from selling the 5,000 shares at the trades that have been matched to date.

However, to get the average trade price, this needs to be divided by the total number of shares traded, which was 5,000 to give the average trade price of $110.40.

Of the third buy trade that was initially there, 1,000 shares will remain at the top of the buy side of the order book at a price of 109.