Bitcoin Order Book Trading: Everything you Need to Know


They can use this data to evaluate the market and determine whether it is appropriate to trade. They may, for example, utilize a stochastic indicator and then fine-tune its settings using theorder book in stock market. Knowing how to time your purchase or when you want to make a sale can play a critical role in success — especially when dealing with small margins.


The how to read the order book comprises several different data types that allow it to store different types of information… In the example above, we can see a large order of 500.2 BTC units waiting to be filled with a bid of $6,263. In the Bitfinex order book, you will also see the terms „count“ and „total.“

Order Book Trading Strategy

For example, from this instrument we can obtain the minimum and maximum purchase price of an asset at a given time. With that information we can be able to recognize the price spread and also the support and resistance prices of the asset. This gives us a much clearer idea of the level of relevance we should give to this instrument and recognize how it works to take better advantage of it.

Bearish Market TrendBearish market refers to an opinion where the stock market is likely to go down or correct shortly. It is predicted in consideration of events that are happening or are bound to happen which would drag down the prices of the stocks in the market. Underlying AssetUnderlying assets are the actual financial assets on which the financial derivatives rely. Thus, any change in the value of a derivative reflects the price fluctuation of its underlying asset.

Market Order

Additionally, the orders are not always completely — it is GMT common to see buy and sell walls moving up or down, depending on the market’s movements. These lists help improve market transparency as they provide information on price, availability, depth of trade, and who initiates transactions. Order books are used by almost every exchange for various assets like stocks, bonds, currencies, and even cryptocurrencies. Although the two sides display opposing information, the concepts of amount and price are relevant to both. Simply put, the amount and price per order display the total units of the cryptocurrency looking to be traded and at what price each unit is valued.

These are known as the “opening book” and “closing book” respectively. Since the order is rather large compared to what is being offered , the orders at a lower bid cannot be filled until this order is satisfied – creating a buy wall. The count refers to how many orders are combined at this price level to create the amount, whereas the total is simply a running total of the combined amounts. The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.

  • The value of investments may fluctuate and as a result, clients may lose the value of their investment.
  • For example, if there is a large volume of open orders in a security’s order book, the bid/ask spread will be thinner, and vice versa.
  • This opens up a door to more trading opportunities since conditional orders execute upon events that can change the direction of a trade or even the whole market.
  • Anorder book in stock marketlists all purchase and sell orders for different assets at various price levels, along with traders involved in the trade.
  • This data can provide valuable information about potentialsupport andresistance levels.

In actively traded stocks, there will typically be bids every $0.01 below the current bid, and in actively traded futures, there will typically be a bid each tick below the current bid. If there is a gap between the current bid and next bid, that typically means that the stock or contract may have a larger bid/ask spread than stocks with bids or offers at every visible price level. Conversely, the sell side contains all open orders above the last traded price. The opposite of a buy wall is formed when there is an abundance of sell orders at a specific price level, known as a sell wall. Order or continuous books provide open offers and order history for a particular asset at all price levels and total volumes.

An order book lists the number of shares being bid on or offered at each price point, or market depth. It also identifies the market participants behind the buy and sell orders, though some choose to remain anonymous. These lists help traders and also improve market transparency because they provide valuable trading information. The horizontal axis of the market depth chart shows the prices at which buy and sell orders are placed, while the vertical axis shows the number of orders placed at each price level. You can hover around the depth chart to see how many buy and sell orders are placed at a specific price.

How to use Level 2 market data

For example, aside from being to trade BTC/USD, you can also trade other cryptos/fiat pairs like ETH/USD, BNB/USD, ADA/USD, or even crypto/crypto pairs like ETH/BTC or ADA/ETH. Sell orders in the exchange are ranked by ascending prices, so the cheapest sell price is always located at the top of the sell order book. This is important because a small spread indicates that the market is highly dynamic, with great liquidity and great depth, which indicates that the market is in good health.

  • Level II market data is more complex, because it shows all bids and offers, not just the highest.
  • This presentation is for informational and educational use only and is not a recommendation or endorsement of any particular investment or investment strategy.
  • The process is usually a bit easy especially when you are using newer trading platforms.
  • Returns will vary, and all investments carry risks, including loss of principal.

Market data feeds provide day traders with current stock prices and recent trades in order books that are sorted into Level I and Level II data. For example, if there is a large volume of open orders in a security’s order book, the bid/ask spread will be thinner, and vice versa. Lastly, the order book trade matching method may not be the best for illiquid markets because it is difficult to find matching orders. As a result, traders may have to wait a long time to get orders executed, and when they are, it could be at an unfavorable price because of large spreads. A decentralized matching engine works better because it fills orders without depending on external liquidity. The order book has a buy and a sell side, revealing the needed information.

Account access and trade execution may be affected by factors such as market volatility. In Singapore, investment products and services available through the moomoo app are offered through Moomoo Financial Singapore Pte. Ltd. is a Capital Markets Services Licence (License No. CMS101000) holder with the Exempt Financial Adviser Status. This advertisement has not been reviewed by the Monetary Authority of Singapore. Moomoo is a financial information and trading app offered by Moomoo Technologies Inc.

Again, this tool shows you the amount of large scale orders in that period and is a good thing for most traders. One of the most popular order book in the stock market is known as the NOII or the Net Order Imbalance Indicator. It is calculated automatically and continuously five minutes before the market opens and 10 minutes before it closes.

What is impermanent loss?

It not only reveals traders who initiate trades, but it also indicates prices that each buyer and seller are ready to accept. Bid-ask SpreadThe asking price is the lowest price at which a prospective seller will sell the security. The bid price, on the other hand, is the highest price a prospective buyer is willing to pay for a security, and the bid-ask spread is the difference between them. As we already explained in the example above, you can use the order book to estimate how a market order is going to execute.

How does the order book work?

An order book is a list, typically electronic, of buy (bid) and sell (offer) orders, including the number of shares to be bought or sold. The order book is organized by price level. This helps keep track of the level of interest for a tradable instrument and shows the market depth.

Order books’ buy side contains all buy orders that are not traded yet (‘open’) and are placed below the current market price. When you open a bid, you essentially saying, “I want to own X amount of this token for Y price.” The trade then occurs once your bid matches someone’s sell order. Order books are used by almost every exchange to list the orders for different assets like stocks, bonds, and currencies — even cryptocurrencies like Bitcoin. Although they generally contain the same information, the set up may be slightly different depending on the source. Buy and sell information may appear on the top and bottom, or on the left and right side of the screen.


An order book offers a real-time “behind the scenes” view into the supply and demand of a particular cryptocurrency. The order book shows potential imbalances between the pending buy and sell orders, which can provide clues in what direction the price may move in the short term. For example, if the number and amount of buy orders are significantly more than those of sell orders, it may hint at significant buying pressure which could push the price upwards. SPOT trading Place limit, market orders and more here.CFD trading Trade CFD with up 100x leverage on CEX.IO Broker.Mobile app Buy, sell, earn and trade crypto anywhere and anytime. The bid-ask spread is actually the difference in price between the highest bid and the lowest ask for an asset in the market. Ideally, a bid refers to the amount that a buyer is ready and willing to pay for an asset.


Then enter the bid amount or the number of tokens/coins you want to buy/sell, and hit the buy/sell option. Your order will be placed and will only execute once a buyer or seller is ready to trade at your bid amount. Cryptocurrency has carved a significant space for itself within the world of finance and is already a favorite of investors worldwide. But to master any craft, it is vital to be absolutely clear on the basics. The crypto market is still new, and the new terms and jargon can confuse some.

Bitcoin leverage ramps up as BTC’s margin long-to-shorts ratio hits a record $2.5B high – Cointelegraph

Bitcoin leverage ramps up as BTC’s margin long-to-shorts ratio hits a record $2.5B high.

Posted: Thu, 02 Mar 2023 21:50:10 GMT [source]

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Do you have to read in order?

No. They all stand alone so feel free to jump in at #2 or #5 or whatever book you've picked up. BUT… if you enjoy reading series (as a lot of my readers do), you'll have a good time going that route because sometimes the characters from the other books make fun cameos.

One of the terms is “order book,” which plays a critical role in the operation of many cryptocurrency exchanges. The order book shows the best bid and the best ask price and reveals important information about the market depth. When clicking on it, the interface will show you the last trades that occurred, their size and the respective price of each trade. The gap between the highest buying price (“best bid”) and the lowest selling price (“best ask”) is ADA called the “spread“. In the crypto market, most crypto traders and investors buy and sell cryptocurrencies on a centralized exchange . Order books are always dynamic, which means orders at each price level may be removed or changed at any time.

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