Order Book
Market Structure
What it means
A live list of all pending buy and sell orders at different prices. It shows the depth of waiting demand and supply at each level.
Example
The order book for a stock might show 500 shares bid at $100, 1,000 at $99.95, and 300 ask at $100.05, 800 at $100.10 -- visible supply and demand stacked on either side.
Mistake beginners make
Beginners think the order book shows future price. It only shows intent, which can be canceled in a millisecond. Spoofing (fake orders) makes some book levels unreliable.
Related terms
- Level 2 — A deeper view of the order book that shows multiple price levels and the size at each, plu…
- Bid — The highest price someone is currently offering to pay for an asset. It is the price you g…
- Ask — The lowest price a seller is currently willing to accept. It is the price you pay if you b…
- Market Maker — A firm that quotes both buy and sell prices and stands ready to trade on either side, earn…