Reading the order book

Reading the Order Book

The order book shows all open buy and sell orders for a market. Understanding it helps you make better trading decisions.

What Is an Order Book?

The order book is a real-time list of:

• Bids - Buy orders (what buyers will pay)
• Asks - Sell orders (what sellers want)

It shows supply and demand at different price levels.

Order Book Layout

Reading This Order Book:

• Best Ask: 59¢ (cheapest price to buy)
• Best Bid: 58¢ (highest price to sell)
• Spread: 1¢ (59¢ - 58¢)
• Midpoint: 58.5¢ (fair price estimate)

Key Concepts

Bid Price

The highest price buyers are willing to pay.

• If you sell, you get the best bid price
• Higher bids = more demand

Ask Price

The lowest price sellers are willing to accept.

• If you buy, you pay the best ask price
• Lower asks = more supply

Spread

The difference between best ask and best bid.

Depth

The total shares available at each price level.

• More depth = easier to trade large amounts
• Less depth = prices move more easily

Interpreting the Order Book

Strong Buying Interest

Large bids stacked near current price:

Signal: Buyers are eager - price may rise

Strong Selling Interest

Large asks stacked near current price:

Signal: Sellers are eager - price may fall

Balanced Book

Similar depth on both sides:

Signal: Market is balanced - no clear direction

Thin Book

Little depth on both sides:

Signal: Illiquid market - prices can move fast

Using the Order Book for Trading

Finding Good Entry Points

Look for:

• Large bids below current price (support)
• Gaps in the ask side (potential for quick moves)
• Accumulation patterns (steady buying)

Avoiding Bad Fills

Check depth before market orders:

• Thin asks = your order moves price up
• Thin bids = your sell moves price down
• Use limit orders in thin markets

Spotting Manipulation

Watch for:

• Large orders that disappear (spoofing)
• Walls that keep moving
• Sudden depth changes

Order Book vs Price Chart

Use both together for complete market analysis.

Live Order Book Features

MANSHUR's order book includes:

Real-Time Updates

• Orders appear/disappear instantly
• Price changes reflected immediately
• Volume updates live

Depth Chart

Visual representation showing:

• Cumulative bids (green)
• Cumulative asks (red)
• Relative buying/selling pressure

Recent Trades

List of executed trades:

• Price
• Size
• Time
• Direction (buy/sell)

Practical Examples

Example 1: Buying 100 Shares

Order Book:

Market order to buy 100:

• 100 shares @ 59¢ = $59.00 ✓

Limit order at 58¢:

• Wait for price to drop, or no fill

Example 2: Large Order

Order Book:

Market order to buy 200:

• 50 @ 59¢ = $29.50
• 50 @ 60¢ = $30.00
• 100 @ 61¢ = $61.00
• Total: $120.50 (avg: 60.25¢)

Better approach: Limit order at 60¢, be patient

Key Takeaways

1. Order book shows supply and demand at each price
2. Spread indicates liquidity - tighter is better
3. Depth shows market strength - more is better
4. Large orders move prices in thin order books
5. Use limit orders when order book is thin
6. Watch for patterns that indicate direction