Order Book

An order book is a live, organised list of all the outstanding buy and sell orders for an asset on an exchange, arranged by price.

How it works

Buy orders (bids) and sell orders (asks) are stacked by price, with the highest bid and lowest ask meeting in the middle; the gap between them is the spread. When a buy and sell order match on price, a trade executes. The depth of orders at each level shows how much can be traded before the price moves — a measure of liquidity.

Why it matters

The order book is where price discovery happens on centralized exchanges, revealing supply, demand and liquidity at a glance. Many decentralized exchanges replace it with automated liquidity pools, but the order book remains the classic market structure.

Example

A thin order book with few orders means a single large trade can move the price sharply.