An order book is an electronic list of buy and sell orders for a trading pair on an exchange, revealing real-time market activity and price levels.

Understanding the Order Book

An order book is a vital component in the crypto trading world. It represents an electronic tally of all buy and sell orders for a specific trading pair on an exchange. Let’s break it down:

Color codes help traders navigate quickly — red for sell orders and green for buy orders.

How Does an Order Book Work?

At the heart of any exchange lies its order book, a dynamic electronic ledger capturing the pulse of the market in real-time. Exchanges rely on a matching engine to pair these buy and sell orders efficiently. The system’s efficacy is paramount for a robust trading environment.

Key elements include:

Primarily, order books comprise limit orders, which execute at a trader’s desired price. Market orders, on the other hand, transact at the prevailing market rate.