Price Discovery
trading
The process by which markets determine an asset’s price through supply, demand, and information flow.
Price discovery is the process by which buyers and sellers turn information, liquidity, and expectations into a traded market price. It happens across spot exchanges, derivatives markets, OTC desks, and peer-to-peer trades.
Price discovery works better when markets have deep liquidity, transparent order books, reliable settlement, and many independent participants. Thin or fragmented markets can show noisy prices that move sharply on small trades.
Related terms
Order Book
→A real-time list of buy and sell orders organized by price level on an exchange.
trading
Liquidity
→How easily an asset can be bought or sold in size without causing a large price move.
finance · trading
Cryptocurrency Exchange
→A cryptocurrency exchange is a platform for buying, selling, or trading digital assets through crypto or fiat markets.
trading · exchange · platform
Over-the-counter (OTC)
→Trades conducted directly between parties rather than through a public order-book exchange.
trading