as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.
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how to understand adding or removing liquidity in stock markets with market/non-market orders?
user
not all limit orders add liquidity, but all market orders remove liquidity presuming there is liquidity to remove. a liquidity providing order is one that is posted to the limit book. if an order, even a limit order, is filled before being posted to the limit book, it removes liquidity. liquidity is measured by a balance and abundance of quantities posted on the limit book and the best spread between the lowest ask and the highest bid.
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