# Difference between real and expected average transaction price of an order?

This might be a really simple question but I'm quite confused. I've been given a limit order book (I don't think it's necessary to upload it for my question but I can if you want me to) and I've been asked to calculate the expected average transaction cost and the real average transaction cost of a market sell order and I'm struggling to find a way to distinguish between the two. The size of the order is the only information about the order given.

What I've worked out using the limit order book is this: $$(4/12 \cdot 102)+(7/12 \cdot 101)+(1/12 \cdot 100) = 101.25$$

I worked this out by taking the best buy orders available on the limit order book, these were 'Buy 400 at price 102', 'Buy 700 at price 101', 'Buy 500 at price 100'. So I took 400 from the first order, 700 from the next and 100 from the last order, therefore I would have $$400+700+100=1200$$ and my order would be satisfied. (I can explain further if this doesn't make sense).

However, I'm not actually sure what this value I've found represents. I believe it is the expected average transaction cost but I'm really not sure if it is the real or expected average transaction cost (or neither). Also, if this value is, let's say, the expected A.T.C, I'm then not sure how I would find the real A.T.C, and vice versa.

I'm hoping someone can clarify what value I've worked out and how I can find the other.

Some orders may be hidden, I guess your expected result is that you don't consider hidden orders as you can't see them in the limit order book, and the real result includes hidden orders.

• Yeah this is exactly it, I clarified with my teacher and she told me the same thing, I probably should have put an answer out on this post. Thank you Jan 27 at 10:49