What is an order book?
- Author
- CRYPTO PORT Editorial
- Published
- Updated
- Reading time
- 4 min
In short
An order book is the list of standing buy and sell orders at each price. Trades happen when a buy and a sell meet. How thick the book is tells you roughly how much volume it takes to move the price.
Key points
- Standing buy and sell orders listed by price
- A trade occurs when two orders meet
- The gap between best bid and best ask is the spread
- A thin book means the price moves easily
Definition
A venue's display of unfilled buy and sell orders aggregated by price, showing the current balance of supply and demand.
Sell orders sit above, buy orders below. The gap between the lowest ask and the highest bid is the spread, and a narrow spread means an easier market to trade. Higher-volume assets generally have narrower spreads and deeper books.
A market order consumes resting orders from the best price outwards. If your size exceeds the depth available, the fill reaches into worse prices — which is why the average price you get can differ from the one you saw.
Dealer-style 'sales' interfaces show no book at all; you trade at the prices the operator quotes, and your real cost is embedded in the spread between them. For the same asset, the cost of using the book versus the dealer desk can differ noticeably — worth checking before you order.
Watch out for
- · In thin hours, the same order size fills at a worse average price
- · Orders shown in the book can be cancelled before you reach them
- · On a dealer desk, the spread is your real cost