What is a Matching Engine?

The software algorithm that forms the nucleus of an exchange’s trading system and continuously matches buy and sell orders, a function previously performed by specialists on the trading floor. Since the matching engine matches buyers and sellers for all cryptocurrencies, it is of vital importance for ensuring the smooth functioning of an exchange. The matching engine resides in the exchange’s computers and is the primary reason why high-frequency trading firms try to be in as close proximity to the exchange servers as they possibly can.