Reading an order book
Bids, asks, the spread and depth: how to read the list of waiting orders and what it tells you about a market.
The order book is the list of all waiting buy and sell orders for a pair, grouped by price. It shows where buyers and sellers are ready to trade right now.
Two sides
- Bids (usually green) — buy orders: the prices buyers are willing to pay, highest first.
- Asks (usually red) — sell orders: the prices sellers want, lowest first.
Each row shows a price, the amount waiting at that price and often the running total.
The spread
The difference between the best ask and the best bid is the spread. A small spread usually means a liquid, actively traded market. A wide spread means fewer orders and a higher cost to trade immediately.
Depth
Depth is how much volume is waiting near the current price. A deep book can absorb large orders without big price moves. A thin book can move sharply when a large order arrives.
Walls
A very large order at one price is sometimes called a "wall". It may slow the price at that level, but large orders can be cancelled at any moment, so walls are not reliable signals on their own.
Limits of the order book
The book only shows orders placed on one exchange at one moment. Orders appear and disappear constantly. Use it together with the chart, volume and recent trades.
University materials are for education only and are not investment, legal or tax advice.