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Sorry I didn't do economics... that may explain why I'm having trouble getting my head around this. I understand that taking either price as the price of the trade is OK with both parties - they're both willing to trade 10 and 10.5. The confusion is that as I understand it, markets use a...

Yep that's right, but say both the orders in my example are the same qty, then my order will match with only that order, and so the question is why does it trade at a price that favours the newer order and not the older one?

According to this description of standard matching you're right: http://www.gtnews.com/article/6096.cfm "if a new offer to sell at £10 matches comes in with an existing offer to buy at £12, the deal will happen at £12)." doesn't make sense to me, it's going against the whole rule...

even though that means the deal is 0.5 worse for the offer? i.e. they were willing to sell for 10.0 or better, and I was willing to buy for 10.5. So the better trade for the offer would be 10.5?

Don't exchanges match orders automatically and trade them if they are the right prices without waiting for anyone to hit them? But I gave a bad example - Say the best offer is 10, and I insert a bid at 10.5, the exchanges should match these orders but will the trade happen at 10 or 10.5...

Hi, Say a stock is trading and the best offer is 10.05. If I insert a bid at 10.00 then my order should be matched with the offer. So my question is will the trade be done at 10.00 or 10.05? I have a feeling that since the offer is older than my bid then then that should get the benefit of...