What Are Crypto Order Books, and How Do They Work?


Another important benefit for using the order book is that it shows you the https://www.beaxy.com/ of liquidity in the market. Ideally, by just looking at the flows of orders in a particular asset, you will be at a good position to understand how liquid or illiquid they are. This fee model used by crypto exchanges is known as the “maker-taker” fee model and will be discussed in more detail in the next lesson. The requirement to take the best available bid or ask price is enforced by a crypto exchange so its customers don’t accidentally take a worse price than the best one available. The order book will have all the buy and sell limit orders that customers have placed on the exchange to either buy or sell bitcoin for U.S. dollars .


An order book is an XLM electronic list of buy and sell orders for a security or other instrument organized by price level. When there is an abundance of buy orders at a specific price level, something known as a buy wall is formed. Suppose you want to determine the amount of interest other investors have in a particular security. You can look at the order book to view all the open orders, including their respective prices and the volume of orders at each price. Retail InvestorsA retail investor is a non-professional individual investor who tends to invest a small sum in the equities, bonds, mutual funds, exchange-traded funds, and other baskets of securities.

Sell orders

This information gives you a good idea of the interest in that security, the sentiment of investors, and the overall market depth of how that security is trading. You can use this info to supplement your analysis and determine whether you should invest in this particular security, or take a long or short position. An order book is often included in what is known as “Level 2” market data—in-depth data on bids and asks for a particular security. Orders can be listed by order volume or price and are updated in real time.

  • Besides showing the highest and lowest bid and ask prices of all the market players involved, this data also shows the number of shares they are trading at that price point.
  • An order book is dynamic, meaning it’s constantly updated in real-time throughout the day.
  • Coinloan.io needs to review the security of your connection before proceeding.
  • This mechanism allows one to lock in higher-profits and limit the amount of loss.
  • For example, let’s say that the current market price for a share of Apple is $300, if you place a buy order at the current market price then the trade will execute and buy the share for $300.

Understanding the various types of orders and how they function is also an important part of being a responsible and successful trader. With a trailing stop, the price that your share are sold at is determined by a specified amount below the market price, usually a percentage. If the price increases, the stop follows the market price by this specified amount. But if the price drops, this lower specified amount will stay the same.

What Is an Order Book in Crypto?

Since the price of bitcoin is using USD as the quote currency, this means that BTC is priced in USD on the order book. The order book is public, allowing all users on an exchange to see the orders in the market. From basic trading terms to trading jargon, you can find the explanation for a long list of trading terms here. Limit orders allow users to trade their coins at a specified price, i.e., at the price you’re willing to trade.

Order books consist of open trades, including market orders, limit orders, stop-loss orders, and trailing stop orders. Bullish MarketA bull market occurs when many stock prices rise 20% from a recent low, with the price climb spanning for an extended period. This helps us to understand the dynamics and depth of the market and how we should act with our orders when making a trading operation. The multi-exchange trading application Atani, has a dedicated space to make visible the order book of the exchange and asset you want.

Order Book Trading Strategies

This is easily identifiable in Atani, as it is shown in a completely graphical way. First of all, if you look at the Atani order book you will see a series of green and red bars, which can be more or less large . Investors who can read all the data available and useful to their financial activities are more likely to be successful. The articles and client support materials available are educational only and not investment or tax advice. Whether you create your own strategy or follow a premium community leader, we believe the power to automate belongs in the hands of every crypto investor.


Knowing how to read and interpret an order book’s information can help you understand the short-term happenings and trends in a crypto market. However, reading and correctly interpreting the information in the book requires patience and practice. The order book shows potential imbalances between the pending buy and sell orders, which can provide clues in what direction the price may move in the short term.

Some exchanges, calleddark pools, have order books that aren’t visible to the public. As a rule of thumb, the buyer’s side is on the left, and the seller’s side is on the right, colored green and red, respectively. A book is a record of all the positions that a trader is holding, showing the quantity of longs and shorts in each security. Market depth is the market’s ability to sustain relatively large market orders without impacting the price of the security.


more about Consensus 2023, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. This price is known as the «ask.» It states, «I am asking someone to buy X units I own at a certain price.» The buy side represents all open buy orders below the last traded price.

That order will be placed with the exchange and left open on the order books, but we cannot expect anyone to take this offer under reasonable circumstances. Placing an order does not guarantee someone else will agree to take the offer. If anyone on the exchange places a better offer than the one we place, then the better offer will be taken first.

Shrimpy helps thousands of crypto investors manage their portfolio in one place. Jan 06, 2023 Some terms commonly used in crypto need explanation, and it is obvious why. DYOR, FUD, WGMI, and many more terms and abbreviations are circulating in this space. Each one has a meaning and while some of them are trivial others are in fact important to understand when navigating the crypto space. Order books are located on the right side of the trading chart after you log into your LiteBit Exchange account. In this article, we are going to explore what an order book is and how you can use them for your trading.


An example order book on Coinbase Pro.When we place an order on the how to read order book, we have two options. Either we can place an open order on the exchange for someone else to take or we can take someone else’s open order that is already available on the exchange. An example would be if we placed an order to buy Bitcoin for 1 US Dollar.

First, there is the level 2 data, which shows the bid and ask prices of a certain asset. For most liquid stocks like Tesla and Apple, this data is usually updated in microseconds as the number of trades increase. In the crypto market, most crypto traders and investors buy and sell cryptocurrencies on a centralized exchange .

Do you have to read in order?

No. They all stand alone so feel free to jump in at #2 or #5 or whatever book you've picked up. BUT… if you enjoy reading series (as a lot of my readers do), you'll have a good time going that route because sometimes the characters from the other books make fun cameos.

Securities ListedListed security refers to a financial instrument such as stocks, bonds, derivatives, etc., registered with and readily tradable on the stock exchanges like NASDAQ and NYSE. The book updates in real-time, allowing traders to identify market trends, popular securities and make informed investment decisions. They can formulate different strategies using the trading pattern, timing, algorithms and charts, and automatic order matching.

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Posted: Thu, 02 Mar 2023 21:50:10 GMT [source]


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