Orders Can Be Removed Without Trading
Up to this point, orders have left the book only through execution.
However, an order may also be removed without any trade occurring If this happens, the corresponding ledger must still change.
- A - book contains an open ask @ $14 for 4 apples.
- B - the reported price remains $14 set by the last recorded trade.
No trade can occur because there is no bid priced at $14 (the ask order's price) or higher.
The Seller Cancels the Order
Event: The seller cancels the ask to sell 4 apples at $14
The cancellation is recorded, and the order is removed from the asks ledger. C
No trade is executed.
No entry is added to the trade tape.
What Changed — And What Did Not
The order has been removed from the book.
Nothing has traded.
The reported price does not change.
Removing an order does not create a trade.
Only executed trades produce entries in the trade tape and update the reported price.
Conclusion
Orders can enter and leave the book without trading.
In this lesson, the order left the book through cancellation.
No exchange occurred, so nothing was added to the trade tape.
By contrast, when orders leave the book through execution a buy and a sell order are matched, an exchange occurs, and a trade record is created.
The trade tape records only completed exchanges, not changes in order availability.