📝 Definition:
An Order Book is like a big list in a marketplace, showing all the people who want to buy and sell cryptocurrencies like Bitcoin.
And how much they want to sell.
It helps people see how much others are willing to pay and how much they want to sell their crypto for.
🔑 Key Features:
- Buy and Sell Orders: Shows all the current offers to buy and sell cryptocurrencies.
- Price Levels: Lists different prices people are willing to trade at.
- Order Depth: Shows how many cryptocurrencies are available at each price level.
⚙️ How It Works:
- Viewing Orders: Traders look at the order book to decide the best prices to buy or sell.
- Placing Orders: You can put your order in the book hoping someone will match it.
- Matching Orders: The exchange matches buy orders with sell orders based on the prices.
💡 Applications:
- Price Discovery: An order book helps everyone understand what the current market prices are.
- Trading Strategy: Traders use it to plan their buying or selling strategies.
- Market Sentiment: Order books give clues about whether more people want to buy or sell.
🔍 Example:
Think of the order book as a big digital board where people pin their offers to buy or sell apples.
Each note shows how many apples they want to buy or sell and at what price.
When someone sees a note with the price they like, they can decide to trade.
This board is always updating as new notes are added or old ones are removed.
That keeps everyone informed about the going rates for apples in real time.