How Does an exchange’S’matching Engine’ Process Different Types of Orders?

The matching engine is the core technology of an exchange that pairs buy and sell orders based on predefined rules, typically prioritizing price, then time. Limit orders are placed on the order book waiting for a match.

Market orders are immediately executed against the best available limit orders on the opposite side. Stop orders wait until their trigger price is hit, at which point they are converted into market or limit orders and then processed.