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Trading 101: Reading a Crypto Exchange's Order Book

If you've traded digital assets on exchanges like Binance, Bittrex, and Kraken, you've encountered something called an order book. This article explains the importance of order books and how to understand and use them.

What is an order book?

An order book on a crypto exchange parallels the traditional concept of an equity or forex order book: a real-time list of outstanding buy and sell orders for an asset such as Bitcoin, Ethereum, or Litecoin. The purpose of an order book is to give traders insight into the price movements and order volume occurring for a specific asset at the present moment. They essentially allow you to 'look behind the curtains' of the supply and demand forces driving price.

How does an order book work?

There are two main parts to an order book: a buy side and a sell side. The buy side (usually in green) contains all of the bids made by buyers to try and acquire a certain amount of the asset at particular prices. The sell side (usually in red) contains all of the asks made by sellers who want to sell a certain amount of the asset at their designated prices.

When a large amount of buy orders are placed, it can create a “buy wall.” This helps to act as a temporary support because the price of the asset cannot dip until the order is fulfilled. For example, one large limit buy (or multiple smaller orders) totaling 100 Bitcoin at a price of $4,000 could trigger a buy wall with $400K of total demand. The same can happen with sell orders, however. When a sell wall is created, it keeps the price suppressed temporarily until the large sell order is completed.

Quadency’s order book experience

An order book is only as good as a trader’s ability to get key information from it in real time. While many exchange's order books can be hard to read, Quadency's unified trading interface normalizes their display to eliminate confusion. Simply select your exchange + trading pair, and watch Quadency's hyper-fast order book stream update in real-time.


And as you can see above, if you have a particular preference on placement of the order book (or any elements of the trade tab), just drag and drop to your heart's desire.