diff --git a/app/order_processor.py b/app/order_processor.py
new file mode 100644
index 0000000..e10354b
--- /dev/null
+++ b/app/order_processor.py
@@ -0,0 +1,33 @@
+from datetime import datetime
+
+import app.database as database
+import app.stock_exchange as stock_exchange
+from app.types import Order
+
+
+class FailedToProcessOrderError(Exception):
+    pass
+
+
+def process_order(db_connection, order_request, place_order=stock_exchange.place_order):
+    order = Order(
+        id="-1",
+        created_at=datetime.now(),
+        side=order_request.side,
+        type=order_request.type_,
+        instrument=order_request.instrument,
+        limit_price=order_request.limit_price,
+        quantity=order_request.quantity,
+    )
+
+    order = database.insert_order(db_connection, order)
+    try:
+        place_order(order)
+        database.mark_order_as(db_connection, order.id_, "placed")
+    except stock_exchange.OrderPlacementError:
+        database.mark_order_as(db_connection, order.id_, "failed")
+        raise FailedToProcessOrderError(order)
+    finally:
+        db_connection.commit()
+
+    return order
diff --git a/tests/order_processor_test.py b/tests/order_processor_test.py
new file mode 100644
index 0000000..97926b0
--- /dev/null
+++ b/tests/order_processor_test.py
@@ -0,0 +1,62 @@
+import app.stock_exchange as stock_exchange
+from app.api import CreateOrderModel
+from app.order_processor import FailedToProcessOrderError, process_order
+from app.types import OrderSide, OrderType
+
+
+def successful_place_order(_order):
+    pass
+
+
+def test_placing_an_order(db_connection):
+    order_request = CreateOrderModel(
+        type=OrderType.LIMIT,
+        side=OrderSide.BUY,
+        instrument="123456789123",
+        limit_price="12.00",
+        quantity=1,
+    )
+
+    order_count_before = db_connection.execute(
+        "SELECT COUNT(*) from orders"
+    ).fetchone()[0]
+    order = process_order(
+        db_connection, order_request, place_order=successful_place_order
+    )
+    order_count_after = db_connection.execute(
+        "SELECT COUNT(*) from orders where status = 'placed'"
+    ).fetchone()[0]
+
+    assert order_count_after - order_count_before == 1
+    assert order.id_ is not None
+
+
+def failing_place_order(_order):
+    raise stock_exchange.OrderPlacementError()
+
+
+def test_placing_an_order_that_fails(db_connection):
+    order_request = CreateOrderModel(
+        type=OrderType.LIMIT,
+        side=OrderSide.BUY,
+        instrument="123456789123",
+        limit_price="12.00",
+        quantity=1,
+    )
+
+    order_count_before = db_connection.execute(
+        "SELECT COUNT(*) from orders"
+    ).fetchone()[0]
+    order = None
+    try:
+        order = process_order(
+            db_connection, order_request, place_order=failing_place_order
+        )
+    except Exception as e:
+        assert type(e) is FailedToProcessOrderError
+
+    order_count_after = db_connection.execute(
+        "SELECT COUNT(*) from orders where status = 'failed'"
+    ).fetchone()[0]
+
+    assert order_count_after - order_count_before == 1