Order book
An order book is the list of all live offers to buy and sell an asset, sorted by price. It shows more than the rate: it shows depth, meaning how much can be bought or sold before the price moves.
How it works
Buy orders stand on one side, sell orders on the other. The gap between the best buy price and the best sell price is the spread, and it is the hidden cost of getting in and out.
A trade happens when one order meets another at a price. A market order takes the best available offers in turn until the size is filled, which is why a large order executes at several prices at once.
Depth matters more than the price on screen. A $100 quote with $2,000 of orders around it means selling $50,000 at that price is not going to happen under any circumstances.
How to read depth
You want to sell 5 BTC. The bids in the book line up like this.
| 2 BTC at | $64,000 |
| 1.5 BTC at | $63,850 |
| 1.5 BTC at | $63,600 |
| Average sale price | ≈ $63,835 |
The screen said $64,000 and you received $825 less across the trade. That is slippage, and the book let you predict it before sending the order.
What to keep in mind
- The book changes every secondOrders are placed and pulled constantly. The depth you saw is not guaranteed by the time you execute.
- Large orders can be theatreA wall of orders can be placed to influence other people's decisions and pulled as the price approaches.
- The spread is a fee tooOn a thin pair it easily exceeds the trading fee several times over; it just is not called a fee.
- A DEX has no bookThere the price comes from a liquidity pool formula, and depth is read from pool size rather than from orders.