A batch auction is a trading method where multiple buy and sell orders are collected and executed at once, rather than individually over time. This approach is used to enhance fairness and reduce price manipulation.

In a typical batch auction, all market participants submit their orders within a specified time frame. At the end of this period, a clearing price is determined based on the total supply and demand. All orders are then executed simultaneously at this price.

This system is beneficial because it can narrow the spread between buy and sell prices, offering a more stable market environment. It also minimizes the chances of front-running, where traders try to exploit the order flow for quick profits.

Batch auctions are particularly useful in markets with high volatility, as they can provide clearer price signals and improve liquidity. By aggregating orders, participants can also experience better execution prices, making it an appealing option for both traders and investors.