Order book
An order book is a digital list of open buy and sell orders for crypto. It shows the prices at which people want to buy or sell.
What is an order book?
An order book is available on a trading platform for a specific cryptocurrency or trading pair. The platform brings together buyers and sellers.
On the buy side are bids. They show the prices buyers are willing to pay and how much crypto they want to buy. On the sell side are asks: the prices and amounts at which sellers are offering crypto.
The list gives you an idea of market depth. That means how many buy and sell orders are waiting at different price levels.
An example of an order book
You want to buy Bitcoin on a crypto exchange. In the order book, you see that sellers are offering Bitcoin at different prices. You also see that buyers are bidding at lower prices.
If you choose a market order, the platform buys at the best available ask price. If there isn’t enough crypto available at that price, part of your order may be filled at a higher price.
Why is an order book important in crypto?
An order book helps traders see how much supply and demand there is at a given time. Many open buy and sell orders can mean that crypto is easier to trade. This is called liquidity.
In news reports or analyses, a large group of buy orders may be described as potential support. Many sell orders around one price may act as potential resistance. These are only signals based on open orders, not a guarantee of future price movements.
When there are few orders, the price may differ more from the price you want during a purchase or sale. This is called slippage. It can be a risk, especially with larger orders or in a fast-moving crypto market.
