An order book is a visual tool that displays the buy and sell activities of an asset, such as a crypto pair on an exchange. It is available to traders on all kinds of trading platforms. An order book might also contain other significant information regarding the asset.
Understanding the term
When you trade using an online exchange platform, the first thing you will notice is that there is something called an order book. It is like electronic documentation that records and provides an overview of all trading activities and volume for any given asset. But more commonly, it gives traders an insight into the asset’s buying and selling history without having to do deep research.
As an order book with several important details, as previously mentioned, reading it requires one to be familiar with four basic terms: bid, ask, price, and amount. Without this information, the order book is considered incomplete. The price and amount are interconnected concepts as they represent the total number of crypto pairs to be traded at a certain price. Bid and ask, on the other hand, stand for buy orders and sell requests, respectively.
The volatile and unpredictable nature of the crypto market can be observed with an order book as well as the trading history of any particular crypto pair. Order books give an idea of the interest of buyers and sellers in the market.